While the entire Indian Renewable energy industry and especially Solar is appreciative of Government of India’s initiatives to support green energy during the pandemic, the domestic manufacturing sector requires a major boost to make the ‘Aatmanirbhar Bharat’ vision a reality.
As we inch towards the Union Budget, we are hopeful of targeted initiatives and policies for scaling-up the domestic solar manufacturing aligned to the 450 GW renewables by 2030 target. There is an immediate need to build a robust eco-system for indigenous solar manufacturing and making it cost-competitive to achieve the Government’s vision of Aatmanirbhar Bharat.
We need a comprehensive policy framework encompassing both tariff and non-tariff barriers, long term financial support and direct incentives to make the domestic solar industry cost-competitive. The finance ministry should consider 5% Interest Subvention on term loan and working capital, upfront Central Financial Assistance of 30% on CAPEX, increase export incentive from 2% to 8% under Remission of Duties or Taxes on Export Product (RoDTEP) which will aid indigenous solar manufacturing.
Further, the industry awaits the implementation of Basic custom duty (BCD) with exemption to Special Economic Zone (SEZ) based solar manufacturers and the Production Linked Incentive (PLI) scheme. In our view, bringing down Minimum Alternate Tax (MAT) for units operating in SEZs, extending Section 10 AA of Income Tax Act till 31st March, 2022 for SEZ based solar manufacturing unit, preferred interest rate support and priority lending support for manufacturing units, availability of National clean energy fund (NCEF) for expanding solar R&D are critical to augment domestic solar manufacturing.
Additionally, we recommend, the Government to consider implementing tariff barriers like BCD/Safeguard Duty/ADD for at least 4-5 years. Offering capital subsidy of 50% for setting up R&D and Quality testing infrastructure within the manufacturing units will help build scale. Also, Super-deductions of 200% of the R&D expenditure for new and clean solar technology development should be allowed. India already offers super-deduction of 200% of the R&D expenditure in emerging areas such as bio-technology which has led to rapid growth of Indian biotech and pharma companies.
Considering the importance of Electric Vehicle( EV) battery ecosystem in a solar smart nation, we recommend special funds to be allocated for this development.
In our view, implementing these policy recommendations will not only encourage economic recovery amidst the pandemic, but will also provide an enabling eco-system to make India the global manufacturing hub for solar.
Vikram Solar is ready and equipped to play a pivotal role in creating a self-sustaining ecosystem for solar manufacturing in India aligned to the Government’s Aatmanirbhar vision. With our current 1.2 GW module manufacturing capacity, plans to scale-up additional 3 GW integrated module, cell and wafer manufacturing, technologically advanced product portfolio, we are well poised to capitalize on the opportunities both in the domestic and international markets.
Vikram solar will remain at the forefront of partnering with the government in building the new, energy rich, and self-reliant India.