Disruption in the supply from China due to the COVID-19 pandemic and subsequent decline in domestic solar capacity addition offer a golden opportunity to ramp up local manufacturing of solar modules and cells, according to industry experts.
However, the industry feels there is an urgent need for a national vision policy for local solar modules manufacturing as well as ancillary products, in line of solar power generation target of 100 gw by 2022 under National Solar Mission.
Till 2011, India controlled 70-80 per cent of global supplies of solar modules, but today the opposite is the case, as 80-90 per cent of modules are imported, as domestic modules are not cost-effective.
“The COVID pandemic is a wake-up call for us. We must focus on domestic manufacturing but for that to happen we need a long-term business proposition.
“We”ve world-class technology, but we don”t have scale like China. For manufacturing to succeed, we need a policy framework that ensures long term off-takes at sustainable prices,” Tata Power Solar managing director and chief executive Ashish Khanna told PTI.
Vikram Solar chief executive Saibaba Vutukuri also underlines the need to focus on local manufacturing.
“The vision of 100 gw solar capacity by 2022 is fantastic and can be achieved. But to meet the target, there is a need to push local manufacturing so that our dependence on imports comes down,” Vutukuri said.
Noting that till 2011 India was one of the largest exporters of the best-in-class modules, he said with a strong policy push we can reclaim that position again and we need to learn a lesson or two from China in building scale.
“Realising the huge potential, China changed its focus from generation to manufacturing of solar modules and set up large plants that offered them economies of scale, helping it lower the cost and capture global market,” he said.
Chinese government also helped companies with heavy subsidies, which helped them kill competition without much efforts and capture markets that were dominated by India till then, Vutukuri added.
Currently, India has an installed solar generation capacity of 34 gw, while the installed module capacity is only 10-11 gw.
Domestic manufacturers, including Bhel, Tata Solar, Moser Baer, Indosolar and Lanco, were the pioneers of the industry. However, over the years, due to stiff competition from China some of them could not sustain and some of them are fighting bankruptcy now.
New & Renewable Energy secretary Anand Kumar recently called for increased domestic manufacturing capacity to ensure energy security.
“Till now we’ve been manufacturing cells, modules, ingots and wafers. But now, we need to go beyond and start manufacturing other ancillary equipment like back-sheets, glass, inverters, transformers, cables etc so that we have an entire manufacturing ecosystem for renewable energy,” Kumar had said.
To offer a level-playing field to domestic manufacturers, the government had slapped safeguard duty on imports in 2018 and the Directorate General of Foreign Trade is now looking at whether to continue with the duty or not after July, when the high duty regime is supposed to end.
The Budget 2021 has imposed a 20 per cent basic customs duty on imported solar cells and modules. But, industry leaders say there is no clarity new customs duty as of now.
According to the data from industry tracker Mercom, as of December 2019, Chinese firm Trina Solar was the leading module supplier in India in terms of volume.
Chinese firm GCL System Integration Technology is reportedly planning a 60-gw module factory at Hefei in the Anhui province, adding 15 gw each year to 2023.
“If such plants actually comes up then that will be the biggest challenge for us. If they start dumping this capacity into our market, domestic module manufacturing will become unsustainable,” Vutukuri said.
Many domestic manufacturers are willing to increase their capacities, but all they need is strong support from the government, concludes the Tata Solar chief.