Way forward for Solar Manufacturing companies

As per MNRE, the installed capacity of Solar cells and Modules in the country is 1212 MW & 5620 MW respectively. National Solar Mission targets, indigenous manufacturing capacity to the tune of 4-5 GW is to be achieved by the year 2020 in India while globally, china leads the pack with around 70% of the global capacity followed by US, Japan, Malaysia among others. Lets see if this feasible and are in line with our targets to reach 100GW by 2022.

Solar manufacturers in India do not enjoy the luxury of low cost debt (with long period for repayment), capital subsidy for setting up the facilities, suitable land policies, qualitative & cheaper power which helped countries like China and US to capture global markets. 

Recent WTO order comes as a shot in the arm of the Indian governments plan to develop and strengthen indigenous manufacturing facilities. Though PSUs will be able to procure from domestic manufacturers but the capacities envisaged for them are not enough for reaping benefits through economies of scale.

Being capital intensive industry, Govt must provide incentives in the form of loan guarantees for setting up the facilities and exemption of taxes & duties for the import of raw material (Polysilicon, Wafers and Cells). If we see lending interest rates in China and US, it is not more than 7% in the last 5 years whereas in our country it is well above 10% and added to that repayment period is also short compared to them. This is the first and foremost issue which needs to be handled by the GoI.

Energy cost constitutes nearly 30% of the module cost and so there is need to create a separate tariff category free from cross subsidies for solar manufacturers which can bring down manufacturing costs. Also quality reliable power should be ensured to them.

International Solar Alliance is a good step towards bringing nearly 120 countries on the same platform to pursue cooperation in training, building institutions, regulatory issues, common standards, and investment including joint ventures to undertake innovative and concerted efforts for reducing the cost of finance and cost of technology for immediate deployment of competitive solar generation. So far, Around Rs.180 crore was allocated by MNRE for solar R & D and around Rs.100 crore for NISE in the last 4 years, this is a good sign 

These points if addressed effectively, we can see Indian manufacturers competing with Chinese manufacturers in the next 2 - 3 years.