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Solar manufacturers ready to expand if govt gives incentives, curbs imports

Leading the manufacturing expansion is Adani Mundra, which is planning to add another 1 Gw of capacity

Shreya Jai  |  New Delhi 

The manufacturing industry is confident that the Centre will provide them supply exclusivity for the KUSUM scheme and several central  PSU projects
The manufacturing industry is confident that the Centre will provide them supply exclusivity for the KUSUM scheme and several central PSU projects

The country’s solar cell and module makers are ready to add 8-15 Gigawatt (Gw) manufacturing capacity annually but want the government to offer them demand surety and restrict Chinese imports.

In a letter to the ministry of new and renewable energy, the manufacturing industry is confident that the Centre will provide them supply exclusivity for the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) scheme and several projects of Central public sector

Leading the manufacturing expansion is Adani Mundra, which is planning to add another 1 Gw of capacity, followed by Jupiter Solar, Premier Solar and others.

The current solar cell manufacturing capacity stands at 3 Gw. The short-term plan is to expand current cell manufacturing by 2.5 Gw and set up another 10 Gw by 2021. The industry plans to add 15 Gw of module manufacturing by same year.

“The implementation of these plans are subject to continued demand visibility/and protection from imports of cells and modules, at dumped prices, from China/Taiwan/Malaysia/Vietnam and financial closure with Indian banks,” said the letter by the Indian Solar Manufacturers’ Association (ISMA) to R K Singh, minister of state for power and the ministry.

The Centre announced imposition of safeguards duty for two years in 2018 – 25 per cent in the first year, 20 per cent for six months and 15 per cent after that. The duty would specifically impact the solar panels coming from China, as more than 85 per cent of India’s solar capacity is built on Chinese panels. The industry, in a separate petition, has asked the government to consider extending the duty beyond 2020.

“While the safeguard duty imposed by the government was a much-needed respite at the time, the duty has given impetus to various loopholes like import practices from Thailand and Vietnam and the acceptance of ‘pass through’ from China. This, in-turn, deterred the business spirit of entrants in the solar manufacturing segment,” said Sunil Rathi, director – sales and marketing, Waaree Energies.

The domestic industry is now banking on several schemes wherein domestic content would be preferred. The KUSUM scheme is one of those.

The scheme pertains to setting up of 10 Gw grid-connected renewable power plants, each of 500 Kilowatt (Kw) to 2 Megawatt (Mw) in rural areas. This, along with 1.75 million standalone off-grid solar water pumps, will fulfil irrigation needs of farmers. It would include solarisation of existing 1 million grid-connected agriculture pumps that would also allow farmers to sell surplus power to distribution and get extra income.

With all three, the scheme aims to add solar capacity of 25 Gw by 2022.

“KUSUM and similar schemes as well as import restrictions by way of tariff and non-tariff barriers on imports will complement each other. The former will create demand and the latter curtail the substandard and underpriced imports into India. Together, these initiatives can incentivise the domestic solar manufacturing industry in creating a sustainable manufacturing ecosystem in the solar sector,” said Amit Gupta, director – legal & corporate affairs – Vikram Solar.

The industry has been not been bidding for the government’s manufacturing tender. The last date for submitting bid for the power plant-linked solar manufacturing tender was extended for the 11th time last week, as no bid came from any company. It is for setting up of 6 Gw plants linked with 2 Gw (per annum) of solar manufacturing plant.

After several extensions due to lack of interest, the Central government, in January, decided to cancel the lone bid that came for setting up solar panel manufacturing along with a plant.

The single bid came from Azure Power with Waaree Energies. The government re-issued the tender in March and this was also extended again.

Gupta said, “In order to make the manufacturing tender successful, the government needs to delink penalties of manufacturing and solar deployment and substantially reduce/rationalise penalties for delays in setting up manufacturing unit.”

He added, “Upper ceiling for tariff and minimum period of setting up manufacturing unit to at least 36 months should be removed. Net worth requirements also need to be relaxed.”

First Published: Tue, August 27 2019. 14:15 IST
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