In an attempt to keep Infraline Energys’ readers abreast with the key issues and challenges engulfing the sector, Infraline Energy tries to bring forth the opinion of key personnel whose decisions and opinion play a vital role in shaping the sector. Please find below excerpts from the interview that Infraline Energy conducted:
HR Gupta, General Secretary, Indian Solar Manufacturers’ Association (ISMA) shares his views on falling solar tariffs, the issue of Anti-Dumping Duties on solar panels and domestic manufacturing scenario in India. Excerpts:
Please share your outlook for solar manufacturing in India?
Solar manufacturing in India is poised to expand significantly as and when ADD SGD and CVD duties are imposed by GOI. Brownfield expansions, technology upgrades as well as Greenfield plants are envisioned in the multi GW scale as also a strong impetus to set up extensive manufacturing facilities for allied solar components. The GOI is now focused on developing an eco-system for manufacturing of solar components with a base of 10GW including for poly silicon and wafers amongst others.
What are the key challenges facing solar manufacturing in India?
Key challenges for solar manufacturers have been predominantly unfair trade practices and under recovery pricing forcing those to shut down plants or utilize sub optimally. Additionally, clear demand visibility and a robust pipeline are fundamental to support competitive manufacturing in capital intensive industries. High cost of power and debt are issues that have also plagued the sector for almost 10 years. The absence of local components force us to import materials and provide additional freight and handling costs as well as forex volatility.
How are anti-dumping duties likely to impact solar manufacturing in India?
ADD will be an effective tool to create a level playing field wherein dumped product cannot usurp the entire market as is being done now. ADD will revive local manufacturing units and save them from becoming NPA and further putting stress on our Banking System. It will make the global players look to establishing factories in India rather than Vietnam, Malaysia and Thailand where there is marginal solar deployment but large manufacturing units for tax and cost benefits. However, these have been built to supply goods circumventing duties to other multiple countries that have imposed levies.
Domestic manufacturers accounting for only around 10% of the market as of now, despite India having an ambitious 175GW clean energy target by 2022, of which 100GW is to come from solar projects. How can India increase its domestic manufacturing base?
If there is a positive environment with stable demand and reasonable profit allowing a positive IRR, there is no dearth of companies, both foreign and domestic, that would be keen to set up labs and create a vibrant manufacturing base exceeding 10 GW, possibly 20GW annual capacity. India’s demand projections for power and RE power in particular are staggering and one of the largest investment opportunities in the world today with a 20-30 year horizon. It is best if we leveraged this historic opportunity for India and Indians to Make In India for India and also for export. We would drive costs and technology and also generate noteworthy employment and contribute to energy security and reduce our dependence on imports that is already alarmingly skewed.
The government has invited bids for another 20 GW of solar capacity in India. How do you see this impacting domestic manufacturing of solar equipment?
The SECI 20GW EOI with local sourcing is another example of the GOI’s intent to become self-reliant in solar components. We see this as a positive signal and reinforces our view that GOI is focused on local manufacturing. The impact will be expansion and new labs and especially incentivizing upstream sectors.
How has decline in solar tariffs impacting domestic manufacturing industry?
The decline in solar tariffs is a matter of concern to both manufacturers and bankers. We have repeatedly cautioned against such adventurous bids that seem utterly unsustainable at the time of bidding but these punts have worked out in favor of importers for the last 6 years except this year!! Prices of solar panels have increased 12-15% from China from March to October this year due to China’s internal demand as well as heavy shipments to USA where also they expect SGD to be imposed this month.
How is the retail network for solar equipment shaping up? What are the key challenges in marketing/distributing solar products like modules and panels?
Indian importers faced order cancellations, delays and escalations in price of established contracts and had no option but to accept as they had timelines to meet for project completion. The erstwhile shortage of tenders caused extreme anxiety and built up appetite for scarce tenders and therefore unrealistic bids as L1 were accepted much to the consternation of the manufacturing and financing sectors. Retail networks are expanding exponentially and as awareness amongst the general public and acceptance by DISCOMs is making progress, we expect this to be a key development of the next few years. For DIY and rural electrification as well as Rooftop solar, the proliferation of a retail eco system would become a hand-in-hand support mechanism.
Infraline Energy would like to thank the contributor for his/her valuable time and opinion shared on the topic.