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Interaction | September 2015

We need investment of over $100 billion, over the next 8 years

Hitesh Doshi, Chairman & Managing Director, WAAREE Group

What are the hurdles you face, in procurement of components?
From our perspective as a solar panel manufacturer, there are challenges regarding Indian made solar cells. Firstly, cells manufactured in India are 15-20 per cent costlier and less efficient as compared to imported ones. Secondly, there are supply constraints fon account of limited manufacturing capacities.

Domestic manufacturers who import raw materials face delays at the ports for clearances and logistical challenges in transporting it to the factory.

What percentage of your procurement is domestic and how much consists of imports?
We are one of the largest module manufacturer in the Domestic Content Requirement (DCR) category. So approximately 70 per cent of our procurement is from domestic suppliers and the rest is from overseas.

Has our anti-dumping policy had any quantifiable effect?
Yes. Solar manufacturers are dependent on import of cells in particular, since there is a supply constraint. For modules, the dependency is a bit less. There is no anti-dumping duty on solar modules and cells, in the interest of the nation, for early realisation of solar power installations and grid parity. Government has set ambitious targets and it can´t wait till the industry catches up.

Will manufacturing shape in line with new solar projects? Domestic manufacturing has to catch up. We have an estimated 2-3 GW of module manufacturing in India. To achieve the targets, we have to install more than 13 GW a year. So there is a huge demand supply mismatch. We can already see big international players who are tying up with Indian companies to set up manufacturing facilities here.

In the next couple of years, I am sure that we would see an exponential growth of module manufacturing capacity and allied industries in India.

Domestic manufacturing is still not attracting investment compared to many other countries. Your opinion?
I do not completely agree that we are not attracting investment. Although, I would agree that the progress has been bit slow. Our target of 100 GW would need an investment of over USD 100 billion, over a period of the next 8 years. This sector will only attract investors with a long time perspective for India as an investment destination.

If you follow the recent announcements, sizable investments have been committed by international investors. To quote a few recent ones, Softbank, is considering investing USD 20 billion in India. Sun Edison has reported investment plans of USD 15 billion by 2022. Rosneft is interested in investing for 10 GW of solar projects.

The good news is that, our government and our Prime Minister have shown determined support for solar energy, which will help translate the investment plans into action.

Are government initiatives or plans supportive of the sector´s development? What should they do to provide maximum opportunities in this sector?
Government in the right earnest is trying to do its best for the domestic manufacturers while ensuring that it doesn´t derail the target of powering every home.

DCR category in JNNSM projects is an appropriate initiative in this direction, but the policy needs to get evolved further to ensure that more opportunities for domestic players are offered. In India, the functional domestic cell production capacity is at around 500 MW. This acts as a constraint and DCR mandate becomes limited. To increase this DCR mandate in terms of MW´s and ensure that the local industry is capable to deliver, perhaps one more variant of DCR for complete module instead of only the cell can be implemented. This would help to increase the overall DCR mandate as well as ensure that modules are manufactured in India, even with an imported cell.

What solutions would you recommend to counter the problems that solar manufacturers in India face?
A few solutions I would like to recommend to help alleviate the problems faced by local manufacturers are as follows:
We propose that government have two distinct categories under DCR that is DCR C (for cells) and DCR M (for modules, so that the DCR mandate can be extended to more than 500 MW.
Financial aid should be extended for infrastructure development to Indian manufacturers.
Quality standards to be specified by National Institute of Solar Energy (NISE) for solar modules so that quality is not compromised by cheaper imports. To encourage export of modules, manufacturers should get export incentive and duty drawback benefits.
Tax exemption of VAT, CST, GST and excise duty should be offered to the domestic solar industry so that they can compete with cheaper imports

How optimistic are you about future prospects? What growth do you expect?
We are very optimistic about the future prospects of solar in India and I am sure that we would be very close to realising the targets.

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