Ease of doing solar business in India

India stood 142^nd in the Ease of Doing Business ranking in 2015, compiled by the World Bank. The country is currently blowing horns on all fronts about its ambitious solar plans. Indeed the country is doing really well to achieve its targets, with 2GW already installed in 2015. Large tenders are being announced on state as well as central level. Not only the domestic companies, but large international solar players are also taking part in this huge process. Solar power in India is set to double to 4-5 GW in 2016. So it looks like a lot is happening not only on papers, but also in reality.

However with falling tariffs, it raises concerns whether the business will remain profitable for developers. It is also true that the cost will fall in future, but will the fall justify a decent profit. Also currently international solar companies are selling solar panels at mostly ~45-48 cents per watt, while in China the ASP (average selling price) is around 55 cents per watt and ~60 cents per watt in USA. So why will these companies continue to do business in India?

Many Tier1 Chinese solar companies were planning to set up manufacturing capacities in India, so as to take advantage of the “Make in India” policy of the government. But till today there are no signs of any construction. Why is it so? The Indian domestic companies are also not that aggressive as their western peers and are not globally competitive, because they lack R&D capabilities and are dependent on foreign countries for their raw material requirements.

Though India seems to be a low cost nation in terms of cheap labor, there are other hidden costs which have stopped the foreign companies to explore the vast opportunities in our country. The infrastructural cost eg. Ships waiting on the docks for clearance, bad roads delaying transportation, grid issues or government approval, or the red-tapism and bureaucracy costs etc. all these have been hampering the state of the Indian business, though there are boundless opportunities existing in this country. You must have noticed that no foreign company dares to set up a manufacturing plant or do business, other than a JV with an already existing business house in India. That is because they are not aware of the business standards in India, especially due to the red-tape involved.

Though I applaud the Modi government, who is easing the process of doing business in India, but it still has a long way to go to make the country an independent and bright nation in the whole wide world.