In a bid to push Make in India, the government will soon announce a policy to boost end-to-end manufacturing of solar equipments like polysilicon, wafers, cells and panels.
“The incentives under this policy to will be given to those setting up manufacturing units worth Rs 1000 crore or more” says a top source who refused to be named. The focus of the policy is to reduce the cost of electricity and capital. Solar equipment manufacturing is an energy-intensive sector, and so special attention is being given to enable manufacturers to procure electricity at the cost of generation without the additional levies of surcharge.
This policy is being designed by the Department of Industrial Policy and Promotion in association with the Ministry of New and Renewable Energy and will be taken to the Cabinet for its approval, soon. As the government has raised India’s target for solar power generation to 100,000 MW from 20,000 MW by 2022, there is an acute need to promote equipment manufacturing that is largely dependent on imports. From present levels of manufacturing capacity of 1.5 gigawatts (GW), sources in the government say that the target is to increase it to 10 GW in the next 4 years.
The Make in India policy already recognizes solar manufacturing as an industry with “strategic importance”. Apart from providing equipment supply security, a recent KPMG report says that, “A sustainable domestic manufacturing industry can save $42 billion in equipment imports by 2030 and create 50,000 direct jobs and at least 125,000 indirect jobs in the next 5 years.”
But the challenge will be to ensure pricing of India-manufactured equipment at levels to match the aggressive solar tariffs and to remain competitive against imports from China. “At a time when solar power generators are promising to reduce the unit cost of solar power to Rs 4.35, its obvious that they will want to keep the price of equipment low. So the government has to ensure a healthy solar tariff regime if investments in manufacturing has to come in” says Santosh Kamath, Partner and Head of Renewable Energy at KPMG.