Solar manufacturers need government support: Report

Government support to solar equipment manufacturers will lead to improved energy security, job creation and huge foreign exchange savings for the country, according to a report Thursday by consultants KPMG.

Published jointly by Indian Solar Manufacturers' Association (ISMA) and KPMG, the report says a holistic policy to encourage domestic solar manufacturing is urgently needed given the strategic need for solar power in India.

Promoting domestic manufacture, which has not been able to develop economies of scale and an end to end supply chain, can save as much as $42 billion in equipment imports, the report said.

Solar promotion will also help create 50,000 direct new jobs and more than 125,000 indirect jobs over the next five years, it added.

According to ISMA president Ashwani Sehgal, Indian solar manufacturers are losing out to foreign manufacturers as there is not enough incentive in the country as compared with other countries.

"Countries with ambitious solar energy generation plans such as China, USA and Japan have strongly supported domestic manufacturers through a number of trade and manufacturing incentives to make them even more dominant in the coming years," Sehgal said.

The presence of solar manufacturing within the country will also result in better energy security as it would prevent potential supply side disruptions since the country would not be dependent on imports, the report said.

"While supporting domestic manufacturing industry could result in moderately higher price of solar power in the short run, the cost curve would fall in the medium term as scale and supply chains develop," said Santosh Kamath, head of Renewable Energy, KPMG in India.

The report notes that if solar manufacturing is backed by reliable long-term demand on a level playing field, there would be substantial investments by solar equipment producers.

It is estimated about 100 GW of solar capacity shall be established in the country by 2030, the KPMG-ISMA report said.