Govt in Favour of Domestic Solar Manufacturing, Market not so Much

The government is heavily indulged in promotion of domestic solar manufacturing, however, when it comes to utilisation on projects, imports are still favoured

According to information relayed in a recent parliamentary discussion, the central government is heavily indulged in promotion of domestic solar manufacturing as portrayed by all the policy changes and financial incentives being introduced to help boost domestic capacity and competition. However, when it comes to utilisation on projects, imports are still heavily favoured.

Answering a question raised in Rajya Sabha, Union Minister for Power and New and Renewable Energy RK Singh has informed about the many steps the Government has taken for enhancing domestic manufacturing capacity and capability of solar equipment. These include:

(i) Domestic manufacturing of solar cells and modules in India is being supported by the Government of India through the Modified Special Incentive Package Scheme (M-SIPS) of the Ministry of Electronics & Information Technology. The scheme, inter alia, provides for:

(I) 20-25 percent subsidy for investments in capital expenditure for setting up the manufacturing facility; and

(II) Reimbursement of countervailing Duty (CVD)/ Excise Duty for capital equipment for the units outside Special Economic Zone (SEZ).

(ii) The imposition of Safeguard Duty on import of solar cells/ modules from certain markets

(iii) Mandating the use of solar PV cells and modules from domestic sources and additional subsidy on their use under the different schemes of the MNRE called the CPSU Scheme Phase-II, PM- KUSUM and Grid-connected Rooftop Solar Programme Phase-II.

(iv) and more recently Solar Energy Corporation of India Limited (SECI) concluded bidding for a tender for setting up of Solar PV Power plants linked to setting up Solar PV Manufacturing facilities.

Furthermore, the domestic manufacturers can avail financing from various banking and non-banking financial institutions as per their extant policies and programmes.

Despite all these steps and incentives, a key share of all projects under implementation are still importing solar panels and the key reason for that is that the domestic manufacturing is yet to catch up on the development cycle of solar cell and modules which are being undertaken in countries like China. Modules that offer better efficiency and durability at a lower price.