India Plans Rs 11,000 Crore Aid To Support Domestic Solar Cell Manufacturing

The Ministry of New and Renewable Energy (MNRE) has released a concept note of a proposal that aims to provide a 30 percent subsidy for setting up new solar plants and expanding the existing ones.

India plans to boost solar module manufacturing by providing Rs 11,000 crore direct support along with concessions to cut reliance on imports from China.

The Ministry of New and Renewable Energy (MNRE) has released a concept note of a proposal that aims to provide a 30 percent subsidy for setting up new plants and expanding the existing ones. According to the scheme to be operated by Indian Renewable Energy Development Agency, heavy equipment required to set up projects shall also be exempt from customs duty.

Key Subsidies Proposed to Help Local Manufacturers:

• The policy proposes a direct financial support of more than Rs 11000 crores and a large indirect support by way of concessions
• To ensure a guaranteed market, the policy proposes a 12,000 MW CPSU (this is higher than the earlier proposed 7.5 GWs) program that would have to comply with World Trade Organization (WTO) rules.
• To encourage continuous quality improvement, the DCR would be reviewed every year to earmark part of it for higher quality requirements.
• It is proposed to encourage a gradual shift in the production capacity for the entire manufacturing chain by earmarking certain components of the DCR category for earlier stages. This earmarking would be gradually increased over time to encourage manufacturers to vertically integrate

Governemnt of India has set an ambitious plan to increase the installed solar power capacity more than five-fold to 100 gigawatt by 2022. But the country meets 84 percent of its solar cell demand through imports from China, according to a report authored by consultancy firm Bridge To India. Photovoltaic modules account for more than half the costs of a solar project.

The cheaper Chinese imports have brought down solar power tariffs to record low. Indian Solar Manufacturers Association, however, have petitioned the government to impose an anti-dumping duty on inbound shipments from China.

The renewable energy ministry’s concept note targets creation of solar cell manufacturing capacity of 10 gigawatt over five years with focus both on integrated silica to modules package and also for intermediate standalone packages or combinations thereof. It includes…

• Interest subvention of 3 per cent to manufacturers setting up new capacity for loans taken through state-run banks.
• IREDA will call for expressions of interest from potential manufacturers on the interest subvention.
• The bidders quoting the lowest subsidy rate would be selected, according to the proposal.

The concept note is open to comments and suggestions

Source: Bloomberg Quint