Solar equipment manufacturing: More clarity is needed on the agenda

Issues haven’t been helped by the discrepancy between the manufacturing capability proposed to be arrange by the Rs 4,500-crore PLI scheme and the annual requirement of modules within the nation.

Whilst the federal government seeks to lift the photo voltaic gear manufacturing capability within the nation via the Atmanirbhar Bharat plan, performance-linked incentive (PLI) scheme, and imposition of excessive customs responsibility from April subsequent yr, the trade is in a state of flux because of the second Covid-19 wave and uncertainty over the current coverage adjustments. There’s lack of readability over the nine-month interval between July 31, 2021, when the safeguard responsibility regime involves an finish, and April 1, 2022, when the Fundamental Customs Responsibility (BCD) takes impact. This has made producers and EPC contractors hesitant to go forward with enlargement of capability and place orders for modules, respectively.

Issues haven’t been helped by the discrepancy between the manufacturing capability proposed to be arrange by the Rs 4,500-crore PLI scheme and the annual requirement of modules within the nation. Vikram V, sector head, and AVP of Company Rankings at ICRA says that on the base PLI fee of Rs 2.25 per watt energy, the PLI outlay of Rs 4,500 crore can assist manufacturing and sale of round 21 GW of photo voltaic PV modules over a five-year interval, translating into 4 GW each year, on the base module effectivity and contemplating full backward integration of the proposed models. Nonetheless, “this stays decrease than the anticipated annual photo voltaic PV demand of 8-10 GW in India. Thus, the dependence on imported photo voltaic PV modules could proceed within the close to to medium time period,” he says.

The current coverage adjustments have additionally not addressed the dichotomy of India looking for to spice up manufacturing capability and curb imports even because it stays overly depending on China for uncooked supplies to fabricate photo voltaic panels. In any case, given China’s large-scale built-in operations, and value and technological benefits, home photo voltaic module gamers will proceed to face stiff competitors from imports. Puneet Goyal, co-founder, SunAlpha, a photo voltaic EPC participant that buys panels from each home producers and China, says Chinese language panels would stay round 5% cheaper than Indian modules regardless of the PLI scheme. As in opposition to the present landed value of Rs 20-22 per watt peak for Chinese language panels, the Indian panels would value within the vary of Rs 22-23 per watt peak. “Indian producers will turn out to be extra aggressive if there may be free commerce between India and China, with direct advantages being offered to producers within the type of grants, capital subsidies, energy prices, and so forth.,” he says.

Additional, lack of readability on the transition interval between July 31, 2021 and April 1, 2022 has made corporations unsure about inserting orders for modules, Goyal provides. It’s anticipated that the top of the safeguard responsibility regime on July 31 this yr will result in dumping of panels within the nation, for the reason that value benefit loved by imports would go up additional.

One other situation going through the sector pertains to MSMEs. Whereas the PLI scheme provides advantages to crops above 1 GW capability within the brownfield and greenfield segments, the massive variety of 250-500 MW module manufacturing crops, along with giant ingot-to-cell or wafer-to-cell producers, have been disregarded of its ambit. Specialists imagine that since MSMEs represent the spine of India’s financial system, the PLI scheme must also incentivise MSMEs producing modules and cells. Extra so, because the pandemic has posed a critical problem to the way forward for such models. Hitesh Doshi, chairman and managing director of the Waaree Group, says there may be want for insurance policies that make a distinction on the grassroots degree. “If reforms are usually not carried out, it’s going to result in large-scale shutdown of kit manufacturing models, placing at stake 300,000 jobs,” he says.