DO­MES­TIC SO­LAR EQUIP­MENT MAK­ERS LEFT TO FEND FOR THEM­SELVES

Financial Chronicle - - DIVE - GYANESH CHAUDHARY MD & CEO, Vikram So­lar

THE In­dian Na­tional So­lar Mis­sion (NSM) was es­tab­lished with an ob­jec­tive to achieve sig­nif­i­cant so­lar de­ploy­ment while as­sum­ing a global lead­er­ship role in so­lar man­u­fac­tur­ing across the com­plete value chain of lead­ing edge so­lar tech­nolo­gies. After 8 years of NSM im­ple­men­ta­tion, there is no doubt that In­dia has not only achieved its ini­tial so­lar de­ploy­ment tar­gets but has sig­nif­i­cantly re­vised them up­wards. How­ever, it is in­creas­ingly be­ing re­alised that In­dia’s so­lar story is built pri­mar­ily on im­ports as 85-90% of the so­lar pan­els are cur­rently be­ing im­ported into In­dia to achieve de­ploy­ment tar­gets. Re­new­able en­ergy (RE) now con­trib­utes roughly 10% of In­dia’s en­ergy mix with ap­prox­i­mately 27.4 GW so­lar in­stalled ca­pac­ity be­ing op­er­a­tional.

CHAL­LENGES IN THE PATH TO SOLARISATION

To­day In­dia ranks 2nd most at­trac­tive global mar­ket for so­lar power equip­ment, 3rd in terms of en­ergy gen­er­a­tion ca­pac­ity and 6th in terms of RE in­stal­la­tions but sur­pris­ingly it does not have a mar­ket for its do­mes­ti­cally man­u­fac­tured so­lar prod­ucts. In­dia has ap­prox­i­mately 9 GW of so­lar mod­ule man­u­fac­tur­ing ca­pac­ity and 3 GW of so­lar sell man­u­fac­tur­ing ca­pac­ity, a large pro­por­tion of which is ly­ing idle be­cause of lack of do­mes­tic de­mand. The ob­vi­ous rea­son be­hind this is the cheaper im­ports from China. It has also be­ing re­alised that with fall­ing tar­iffs and fall­ing so­lar equip­ment prices in the in­ter­na­tional mar­ket pri­mar­ily China, In­dian fo­cus has been shifted to lower tar­iffs and cheaper equip­ment than pro­mot­ing man­u­fac­tur­ing, qual­ity and R&D.

Im­ple­men­ta­tion of Do­mes­tic Con­tent Re­quired (DCR) projects to pro­vide se­cure mar­ket to the indige­nous man­u­fac­tur­ers by the gov­ern­ment faced crit­i­cism from the in­ter­na­tional com­mu­nity and could not last long. In­dia had to scrap the same to com­ply with WTO’s or­der. There­after no sig­nif­i­cant pol­icy de­ci­sions were im­ple­mented by the In­dian gov­ern­ment to boost man­u­fac­tur­ing or cre­ate mar­ket for do­mes­ti­cally man­u­fac­tured pan­els. The In­dian so­lar equip­ment man­u­fac­tur­ers are left to fend for them­selves.

It is per­ti­nent to note that the com­pet­i­tive­ness of any man­u­fac­tur­ing in­dus­try is a func­tion of in­puts cost such as in­ter­est, cost of elec­tric­ity and raw ma­te­rial. In In­dia, in­ter­est rate are sig­nif­i­cantly higher and do not have a value chain ecosys­tem for so­lar man­u­fac­tur­ing, as a re­sult thereof most of the raw ma­te­ri­als are im­ported re­sult­ing in higher lo­gis­tic and raw ma­te­rial cost with as­so­ci­ated for­eign ex­change risks. In­dian man­u­fac­tur­ers can­not be ex­pected to com­pete with their Chi­nese coun­ter­parts as they have 5-6 times higher op­er­a­tional ca­pac­i­ties on an av­er­age and have neg­li­gi­ble lo­gis­tic pro­cure­ment cost as en­tire value chain ecosys­tem is built in the vicin­ity. On the top of it, they are also avail­ing gov­ern­men­tal sup­port by way of man­u­fac­tur­ing sub­si­dies.

Pro­tec­tion­ist pol­icy in­stru­ments such as Safe­guard Duty and Anti-Dump­ing Duty are very short-term so­lu­tion to pro­vide and are con­sid­ered in­suf­fi­cient tools to cre­ate mar­ket for do­mes­tic prod­ucts. In­dia needs to learn from China in terms of build­ing ro­bust man­u­fac­tur­ing base by in­cen­tivis­ing them. The gov­ern­ment should ini­ti­ate mul­ti­ple steps to de­velop In­dian man­u­fac­tur­ing base for so­lar equip­ment and cre­ate long term mar­ket vis­i­bil­ity for do­mes­tic equip­ment.

PRO­TECT­ING DO­MES­TIC MAN­U­FAC­TUR­ING IS IM­POR­TANT

In­dia has be­come a big global mar­ket for so­lar equip­ment and it is the high time for In­dia to pro­mote its own do­mes­tic man­u­fac­tur­ing in­dus­try to at­tain self-sus­tain­abil­ity in so­lar man­u­fac­tur­ing as well. This can be done to in­cen­tivise end-to-end man­u­fac­tur­ing, pro­vid­ing power to so­lar man­u­fac­tur­ing at its Av­er­age Power Pro­cure­ment Cost of ap­prox. Rs. 3.47/- and not at nor­mal rates be­sides other in­cen­tives and sub­si­dies re­quired to make man­u­fac­tur­ing an at­trac­tive op­tion.

So­lar Man­u­fac­tur­ing In­dus­try is tech­nol­ogy in­ten­sive and re­quire con­sis­tent in­no­va­tion and R&D, there is an im­me­di­ate need to in­vest in tech­nolo­gies with higher ef­fi­cien­cies. In­cen­tives may be pro­vided to ex­ist­ing man­u­fac­tur­ers to up­grade the tech­nol­ogy through Tech­nol­ogy Upgra­da­tion Fund (TUF) and ded­i­cated gov­ern­ment grants.

In­dia needs to im­me­di­ately im­ple­ment var­i­ous schemes like CPSUs, man­u­fac­tur­ing pol­icy, en­force pub­lic pro­cure­ment or­ders for so­lar pro­cure­ments, in­voke trade reme­dies for heavy im­ports and/or dump­ing. Enough in­cen­tives and sup­port should be pro­vided to do­mes­tic man­u­fac­tur­ers to ramp up their ex­ist­ing ca­pac­i­ties and back­ward in­te­gra­tion.

There are ap­pre­hen­sions that pro­mot­ing man­u­fac­tur­ing and schemes man­dat­ing pro­cure­ment of do­mes­tic equip­ment for so­lar in­stal­la­tion may sig­nif­i­cantly in­crease so­lar de­ploy­ment cost. It is per­ti­nent to note that al­though in­cen­tivis­ing man­u­fac­tur­ing has some short-term costs but the long term ben­e­fits are im­mense such as job cre­ation, con­tri­bu­tion to GDP, re­duced de­pen­dence on in­ter­na­tional mar­ket/im­ports.

WAY FOR­WARD

In­dia is well on its track to achieve so­lar de­ploy­ment tar­gets by 2022. How­ever, the ques­tion we need to ask our­selves is — do we want to achieve these tar­gets based on im­ported equip­ment or in­dige­nously man­u­fac­tured prod­ucts?

If we re­ally want to achieve sig­nif­i­cant part of these tar­gets through indige­nous man­u­fac­tur­ing then im­me­di­ate ac­tions are re­quired to pro­mote so­lar man­u­fac­tur­ing in In­dia. It is im­per­a­tive that un­less bold pol­icy ini­tia­tives are taken by the gov­ern­ment on im­me­di­ate ba­sis, the sur­vival of ex­ist­ing man­u­fac­tur­ers will be dif­fi­cult and the cir­cum­stances will ul­ti­mately force In­dian man­u­fac­tur­ers to shut their shops.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.