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Published:Saturday, September 19, 2020 6:58 AM

Covid-19’s Impact on Indian Solar Supply Chain

Covid-19’s Impact on Indian Solar Supply Chain

Covid-19 has turned the world upside-down into dishevelment. This disease has not only erupted the health of people but have destroyed the economic conditions of the world. The entire functioning of the world has come to a standstill.Trade, business, companies, employment, health care and every possible activity has been affected. India is not isolated from these mishaps; fighting to keep people alive along with trying to save the economic conditions of the country. According to the top economists of the country, India’s GDP to land between 1-2% in 1st quarter of 2021 because of intermittent lockdowns and ceased trade. Covid-19 is reeling the trade and commerce of entire world. Under this purview, contagious pandemic has shackled the Indian solar sector with conundrum in the entire industry.

Indian Solar Industry is largely affected. Its installations, projects, supply chains and complete integration has been disrupted. This outbreak attacked the industry at its zenith when it was immensely trying to reach its 100GW target by 2022. The solar industry of India is heavily dependent on China and other Asian countries for imports of solar parts. India imported approximately $1.18 billions of solar modules in the last two quarters of 2019. Module glasses and wafers are among the most imported parts which contributes to 60% of total cost. Supply chain of the nation suffers due to the following reasons.
Indian ports are completely stocked up due to no logistics. Indian market saw 35% decrease in exports and shipping lines are avoiding Indian land due to lack of space at the ports. Major global shipping lines like Maersk line, Hapag-Lloyd, China ocean shipping company (COSCO) have been completely skipping major Indian gateways like JNPT and other important ports. Simultaneously, the truck transportation at the ports have decreased by 70% due to lack of staff at the ports. Ports are among the major sufferers of the Indian industry, unable to handle the situation, the ports staff has claimed for Force Majeure.
Amidst this outbreak, the procurement of different solar parts got delayed further delaying the commissioning and implementation timelines. This situation may lead to hike in prices of imported parts when the Covid-19 condition normalises. This unlikely situation impediments nearly $2.24 billion projects out of schedule.
India imports 78-80% of total solar components, the Indian manufacturing units are incapable of meeting the demands of around 20GW which the country needs for solar development. The government is continuously working out on expanding the manufacturing sector of the industry. The table given below represents the present manufacturing capacity of India.
Solar PV Cells Capacity
Around 3 GW/year
Solar PV Modules capacity
Around 10 GW/year
No manufacturing in India
In midst of such manufacturing capacity, India is completely dependent on its imports. Also, the importing countries mainly China is among the top in Covid-19 sufferings and its manufacturing capacity has been disrupted. However, China is normalising its state and the production capacity with 70-80% efficiency which can help India restoring the business. Due to the pandemic, price of the solar components is expected to increase by 15-20% in the south-Asian countries.
Policy Interventions by Indian Government
MNRE minister Mr. R.K Singh, in order to increase domestic production has announced to impose basic customs duty on solar imports after the expiry of current safeguard duty on 31st July. This act will propagate domestic production after imposing 15% duty on solar cells and around 40% duty on solar modules.
Announced Force Majeure clause.
Made the ‘must run’ status compulsory for the discoms and generators.
Extending the list of Approved list of Models and Manufacturers (ALMM) to help them with certain benefits.
Exemption of necessary port charges.
Providing small scale developers with 3 months moratorium.
Government has started the functioning of ports, logistics and excises in order to ease the stuck imports at the port.
These policies have been necessitated in the industry to restore the supply chain and to get back the projects on track. Due to Covid-19, the original plan has been modified and revised. The base case solar capacity addition between 2020-24 will be around 35GW. Rooftop and open access installations in 2020 to fall by about 15-20% to 1200MWand 600MW respectively. According to the revised estimates, only 5.5GW of solar capacity will be added this year. While in 2021, government is planning to add 6.5 GW of solar power.

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