Demand for Level Playing Field

SOLAR TARIFFS

are crashing and new project auctions lack response. Solar module and cell makers in India are finding the going tough. No new big capacities have come up in the past 5-6 years. The size of the domestic photovoltaic (PV) and cell manufacturing is only 9 GW and 3 GW, respectively, and India still imports about 85 per cent of what it needs as 20-25 GW is added every year to reach the target of 100 GW by 2022.

Moreover, the domestic solar PV industry is facing a fall in demand for new projects as tariff rates have come down to as low as ` 2.63 per kWh.

The Indian solar PV and cell manufacturing industry has about 100 companies, but modules and solar cells imported from countries like China, Taiwan, Vietnam and Malaysia are cheaper by at least 10-20 per cent.

Chinese manufacturers have the advantage of cheap land and power apart from subsidy and export incentives. They also have economies of scale as they have created huge capacities. In India, land is not cheap, power is not subsidised and the 20-25 per cent capital subsidy offered takes years to get. Plus, debt available to the solar industry is at high interest rates and by the time capital subsidies are released, the subsidy advantage is neutralised by the high interest already paid. On top of this, many states want to revise the existing power purchase agreements (PPAs) to get cheaper solar power.

Keeping all these factors in mind, local manufacturers want the government to enforce high import barriers and also urgently come up with a comprehensive solar policy with incentives for local manufacturing.