‘Policy Framework Needed to Ensure Longevity of Domestic Products Offtake, Profitability’

The government has taken steps by coming up with few manufacturing-linked tenders for setting up solar capacities and has also introduced a basic customs duty on imports, but we need a policy framework that will ensure the longevity of offtake of the products manufactured as well as profitability, says a senior official of Tata Power Solar.

The official optimistically further added that if the Indian government, through various policy initiatives, can ensure scale and profitability, manufacturers will increase production, which will not just cater to the domestic market but can also be exported.

“If there are returns, then why will we not invest? We have already invested in setting up the facility and we are eager to invest more in technology and capacity enhancement. However, manufacturing is not just a transaction but has to be looked at from a long-term horizon,” commented Ashish Khanna, Managing Director, & CEO, Tata Power Solar and President, Tata Power Renewables.

Tata Power Solar, the renewables arm of utility giant Tata Power, is having a manufacturing unit in Bengaluru and has a production capacity of 400 MW of modules and 300 MW of cells. Currently, it is largely focused on setting up solar projects on EPC basis and is keen to invest in technology and capacity enhancement.

India has ramped up its solar tender issuance in the recent past as it has set an ambitious target of installing 100 GW of solar energy by 2022, out of which only 34 GW has been achieved.

On the impact of solar industry amid coronavirus, he, further added that, quoted PTI “coronavirus pandemic is indeed a wakeup call for the solar industry as the sector has been severely impacted due to the shortage of not just cells and modules but also other ancillary products.”

He added that “this calls for setting up more manufacturing facilities in India. But this will happen only if there is a long term business proposition.”

However, Khanna further ensures that India has the necessary technology, which is at par with global standards, but what is lacking is the scale.

Indian solar industry has been impacted as it is mainly dependent on Chinese import of about 80 percent. Government has provided a 30 days’ time extension of solar projects after the lockdown ended but developers are facing a shortfall of raw material, which is expected to affect the installation during first half of the year.

On the implications of setting up domestic manufacturing, Khanna said manufacturing is highly capital intensive and needs to be incentivised by the government to make it more cost-competitive.

“I am told that recently China proposed to set up 60 GW of manufacturing capacity, which can take care of over 50 per cent of global demand. These manufacturers get a lot of subsidies and incentives from the government and therefore can sell it at cheaper rates,” he said.

However, he also feels that “post coronavirus period, developers and contractors may go back to Chinese modules and cells if we don’t give good quality and cheaper alternative which is made in India.”