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Interaction | June 2018

We are hopeful that government will resolve policy issues

Engineering, procurement and construction (EPC) players need detailed geotechnical reports, solar resource availability and ambient conditions, suggests <span style="font-weight: bold;">Rajendra Kumar Parakh, Chief Financial Officer, Vikram Solar. <br /> <br /> Since we have a few players in this space, does solar as a sector pose difficulties for EPC players?</span><br /> Competition exists in every sector; since solar is in demand and is a lucrative business arena, the competition only keeps intensifying. However, there are problems like confusion in GST imposition (18 per cent new tax is now being planned to be imposed on EPC contracts) and PPA re-negotiation, and uncertainty on raw material prices that hinder the EPC projects. However, we are hopeful that the Government of India would resolve the policy issues and allow the industry the much-required opportunities for further growth. <br /> We are depending on our experience, focus on innovation and willingness to go beyond traditional ideas to increase our market share as an EPC player in the country. <br /> <br /> <span style="font-weight: bold;">What has been your experience in adapting technology and balance of systems for projects in India?</span> <br /> Although India needs to focus on investing in R &amp; D, as a tier-1 solar module manufacturer, we have successfully adopted world-class technologies to match the quality and performance of our products and services with international standards. We have manufactured high-efficiency modules using sophisticated technology from Germany, Switzerland and Japan, and focused on efficient tilting technology for maximising yield. We have scored high in international module testing facilities like DNV GL.<br /> <br /> <span style="font-weight: bold;">What are the challenges you have faced?</span><br /> The topography and environmental characteristics are so widely different in India that it was challenging for us to shoulder projects that require out-of-box approach. However, all these experiences have given us an eye for detail and a perception beyond conventional methods, which we believe have made us one of the most recognised and successful EPC solution providers in the country. <br /> <br /> <span style="font-weight: bold;">The AAR for GST in Maharashtra has said that the EPC activities will be considered as &quot;work contract&quot; and are liable to be taxed at 18 per cent... </span><br /> If EPC contracts (identified as works contracts) are taxed at 18 per cent, the cost of solar power plant installation would definitely increase. Projects would become unviable and it would soon be challenging for solar to be at par with conventional energy. Indian solar industry is still at a nascent stage and needs investment and support. Therefore, we believe adding additional taxes on EPC contract would only delay initiatives like &quot;Power for all.&quot; <br /> <br /> <span style="font-weight: bold;">What is the impact of interest rates on solar market?</span><br /> Increasing interest rate can slow down the growth of the solar industry worldwide. In India, increasing interest rate will escalate the material cost, financing cost, project development cost and obviously the solar tariff. Although, solar tariff rise is needed in India, the right approach to stabilise the falling cost of solar power cannot be increasing the interest rate, since it scares off investors. Solar industry worldwide needs support to grow. And, in India, solar industry has immense potential to bring in socio-economic change. Increasing the interest rate would only slow down the growth.<br /> <br /> <span style="font-weight: bold;">- RAHUL KAMAT</span><br />
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