Solar Manufacturing Needs Support to Realize India’s Vision

Hon’ble Prime Minister Shri Narendra Modi’s Government has been pro manufacturing from the very beginning. Initiatives like Make in India, GST, drafting National Policy on Electronics, increasing export incentives, launching phased manufacturing programme (PMP), Modified Special Incentive Package Scheme, and planning a new industrial policy under the current regime have increased the FDI inflow within the country and created an environment to transform the manufacturing sector to become $1 trillion industry by 2025. However, surprisingly manufacturing sector in India is still facing challenges to reach its full potential.

What India Needs

In such a scenario, promising sectors like Solar with potential to shoulder overall growth are failing to lead the country towards sustainability. In last couple of years the country has only attained subpar growth in the solar industry due to global trade dilemma, the twin blows of demonetization and the new indirect tax regime, safeguard duty, the collapse of shadow banking credit, interruptions in global (the US, South Korea, Australia) manufacturing pace. And now the Corona virus outbreak in China has revealed a fatal flaw in India’s consistent dependency towards solar module imports (India spent $2.1 bn in FY18-19, $1.5 bn in FY 19-20 Dec). These challenges are pushing domestic solar manufacturers out of the market and making domestically produced solar modules un-competitive.

At a time when solar adoption is witnessing world wide acceptance, growing multiple folds each year and solar driven renewable energy is expected to see 400% growth within 2040, it is the right time for India to focus on building domestic solar manufacturing scale to reap profits and establish sustainability, mirroring China.

How to Go About Bringing Change

A larger policy framework for Indian solar industry to support and leverage manufacturing plans is immediately needed.  New policies should address manufacturing issues concerning transport, infrastructure, taxation, labor laws, and power outages. Bridging the gap between having policies and implementing them aggressively can also remove confusion from the process and aid growth.

The key to make India globally competitive in the solar module manufacturing sector is through aligning manufacturing plans with global technology roadmap. Subsidies alone cannot achieve this result. Government has to invest in establishing R&D institutions which our country clearly lacks. Longer tenure and low cost finances can also help manufacturers to firmly plant their feet in the ground.

Introducing solar manufacturing in National Skill Development Mission training plans can help in creating skilled workforce, strengthening Indian solar industry and its employment rate significantly. Support to large scale projects and fully integrated manufacturing plants can also be effective additions to the ‘Make in India’ policies in the future.

Policy reforms in India have helped the country rank higher in the list of Business ready countries. And developments in Solar clearly speaks of India’s intention for growth. However, the time is now and Government of India needs to act immediately to invest in domestic solar manufacturing to assert control over its energy future.