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India to announce policy for competitive domestic solar equipment manufacturing

LiveMint logoLiveMint 23-02-2017 Utpal Bhaskar

New Delhi: India is working on a plan for making domestic manufacturing of solar power generation equipment competitive vis-à-vis other countries such as China.

As part of this strategy, the National Democratic Alliance government plans to come out with a policy to promote manufacturing of the entire range of solar power generation equipment in the country.

India’s plan was articulated by Piyush Goyal, Union minister for power, coal, mines and new and renewable energy, at a media briefing regarding the Cabinet Committee on Economic Affairs’ (CCEA) decisions on Wednesday.

This comes at a time when the country has seen record low-winning bids of Rs2.97 per kilowatt-hour (kWh) at Rewa in Madhya Pradesh.

Currently, most of the solar power developers in India have been sourcing solar modules and equipment from countries such as China as they are cheaper.

The development assumes significance given India, world’s third-largest energy consumer after the US and China, plans to achieve 100 GW of solar power generation capacity by 2022 as part of its global climate change commitments. The CCEA on Wednesday cleared the proposal to double India’s solar park capacity to 40,000 mega watt.

Also, this comes in the backdrop of the World Trade Organisation’s (WTO) Appellate Body, the highest court for resolving trade disputes, striking down India’s local content requirements for solar cells and modules last year. The US had challenged India’s solar panel procurement policies at the WTO claiming that it discriminated against foreign manufacturers.

In response to a specific query about foreign companies providing equipment to solar parks in the context of the WTO ruling, Goyal said, “I am in continuous dialogue with the manufacturers of solar equipment in India and I am happy to share with you that there is now quite a significant interest to set up solar manufacturing in India.”

US-based First Solar Inc. and China’s Trina Solar are among firms that are considering plans to set up manufacturing facilities in India as reported by Mint.

“In various conversations which have been happening it has been learnt that people want to set up manufacturing capacity in India. It requires land and electricity to manufacture. We will shortly bring out a new policy to promote manufacturing of entire solar power generation equipment in India,” Goyal said.

The trigger for acceptability of solar power has been its falling tariffs due to the lower cost of raising finances, and the solar module prices taking a nose dive. Solar tariffs declined from Rs10.95-12.76 per kwh during the 2011 financial year to Rs4.34 per kwh last year.

“Simultaneously, MSIPS (Modified Special Incentive Package Scheme) has been expanded…Under it the silicon wafers manufacturers of solar equipment can avail benefits,” Goyal said.

As part of the move towards the goal of ‘net zero imports’ in the electronics sector by 2020, the government last month amended the Modified Special Incentive Package Scheme which was started in 2012 to promote large scale manufacturing in the electronic system design and manufacturing sector by providing subsidies for capital expenditure.

The government also plans to expand MSIPS’ scope to make solar equipment manufacturing competitive in India, Goyal added.

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