India to Empanel Solar Manufacturers, as SD and Tenders fail to Gain Traction

While the Indian renewable energy industry has been extremely successful in growing capacity across the board in both solar and wind energy capacity installation, it has failed woefully in supporting manufacturing, especially in solar energy. The Indian players have failed to compete with massive Chinese imports which have more or less captured the entire Indian industry, with more than 90% of the huge domestic consumption being met by imports.

Piecemeal efforts by the ministry of new and renewable energy have totally failed which is proved with multiple manufacturers going bankrupt, leading to huge losses for both promoters as well as the banks. The recent safeguard duty is another example of a failed policy as imports from China continue to grow at the same pace as Indian installations. The safeguard duty which is only for two years was set to fail due to its wrongful conception right from the start. A solar manufacturer will not invest in a plant which will recover his investment in 5-7 years, while there is a visibility of only two years.

Also, the other governments give large incentives for manufacturing and have much better infrastructure compared to India. The logistics costs of solar panels is also not that high to create a competitive advantage for Indian players. The Indian government has been as usual an utter failure in planning and implementing a good policy to encourage domestic manufacturing.

The recent SECI tender to build 3 GW of manufacturing capacity has failed, given the lack of thought and clear thinking on the part of the government. The draft policy for supporting manufacturing which came out in December last year has also not fructified into a proper policy after more than one year. The government has now decided to empanel manufacturers of solar cells and modules through a process of certification. Only these empaneled players will be able to supply equipment to tenders floated by government organizations and departments. This is another piecemeal effort which will not support the development of the industry much. This will keep the weak and flailing industry players survive in the zombie state for longer without making the industry world class in terms of technology and costs.