If India is to transform itself into a global leader in the future, by leveraging industrial growth, becoming self-sufficient is the key.
If we compare the solar industry scenario in China and the US, the countries that are currently dominating the supply chain market, we would see how they have aggressive measures in place to help domestic manufacturers. The purpose of these measures is to keep domestic companies competitive in the global market. Under the new Government, India is showing strong commitment towards supporting domestic manufacturers, to own and control all the parts of a supply chain.
The Efforts Need Tailored Policies
Industrial India is a collection of diverse business entities with different pursuits, preferences, and statures. Therefore, policies developed in reflection of ‘one size fit all’ ideology won’t work. A multi-pronged approach is required to serve the purpose. For example, the requirements of Micro, Small and Medium Enterprises (MSME)s in India are different than that of large organizations (new/old). For MSMEs, policies should focus on tax provisions for entrepreneurs and labors. Plus, there is a high requirement for managerial skill development to maintain operational integrity at all times. Revising industrial and management training curriculum and mandating new additions focused on educating labor laws, marketing skills, accounting, financial markets, and procurement can help MSMEs make a foothold in the global market. Using media platforms to transmit career oriented education can also stoke the entrepreneurial spirit of the country.
As for the large scale manufacturers, Government needs to play a facilitating role in addressing physical infrastructure issues. Poor connectivity in certain parts of India makes transportation of raw materials a logistical nightmare, slowing down the business growth.
Land acquisition in India is another impediment in penetrating business sectors. Existence of multiple policies and delays in legal processes in acquiring land should be addressed to help large scale manufacturers execute time dependent business operations smoothly. Large scale manufacturers would also benefit from a uniform method of environmental clearance generation and concentration on skill development.
Making Solar Cost Effective
With the raw material for solar products getting cheaper every month, it should not take the Indian solar industry long to produce affordable solar PVs. However, despite decline in prices, we are still spending billions to import raw materials. So, although, we are close to reach grid parity, we are not being able to control/reduce the manufacturing cost of the modules. If the country focuses on saving domestic manufacturers right away, India can save up to $42 billion in equipment imports by 2030 in solar industry only.
Controlling all the components in a supply chain would have given India the opportunity to make solar panels affordable. Solar PV production at feasible rates without compromising on quality is impossible without in-house development of fully integrated manufacturing bases and efficient supply chain network. Easy financing, incentivizing large scale operations, offering capital subsidies, export subsidies, regulating and implementing policies must be considered if Indian solar industry is to compete with leading nations like China, US, Japan, etc.
More R&D institutes in the country can help in setting a global benchmark for product quality standard. Indian Government should also consider increasing the tax incentives and offering performance linked support to manufacturers that are willing to improve and need the right environment to do so.
Supporting domestic manufacturers will keep India from depending on China and other countries for solar supplies, after the completion of green energy transition. With domestic manufacturers at the helm of country’s growth, becoming self-reliant in energy sector would be easy.
The Hindu: http://www.thehindu.com/opinion/op-ed/made-in-india-by-small-enterprises/article6446662.ece
Taiyang News: http://taiyangnews.info/markets/indian-pv-manufacturers/
The Quint: http://www.thequint.com/business/2016/05/20/india-to-consider-direct-subsidy-to-solar-panel-manufacturers-piyush-goyal-power-ministry
Indian power sector: http://indianpowersector.com/2016/10/indias-solar-cell-and-pv-module-manufacturing-capacity-amounts-to-1-5-gw-and-5-6-gw-respectively/