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India Plans More Incentives for Solar Equipment Makers

According to reports, India’s renewable energy ministry plans to introduce more fiscal incentives to boost local manufacturing of solar power equipment, a senior ministry official said Thursday.

The incentives will be for a designated year during which investment by companies in the solar sector reaches a certain threshold that’s yet to be decided, A.N. Srivastava, director of the federal solar program at the ministry, said at a conference.

The ministry has recommended capital grants and equity participation of up to 20% in equipment manufacturers if they’re located in Special Economic Zones, or a more than 25% extension of countervailing duties to companies that are not located in Special Economic Zones, he said.

Countervailing duties are taxes levied by a country on imported goods that are subsidized by the exporting country, to offset the effect of those subsidies.

The ministry has also recommended soft loans at about 5% interest to “units engaged in the manufacturing of smaller components and are not covered under provisions of capital subsidy,” Mr. Srivastava said.

Foreign solar companies have said India’s restrictions on imports of solar power technology are protectionist in nature and make it difficult for them to enter one of the world’s fastest-growing solar energy markets.

India’s solar power program, which plans to add 20,000 megawatts of solar power capacity to its grid by 2020, aims to create a large domestic manufacturing base.

The program’s policy of mandatory use of locally made modules of crystalline silicon and solar cells has resulted in the enhancement of production capacity by about 30%, Mr. Srivastava said. But most critical materials used in making solar cells and modules are still being imported, he added.

The ministry proposes to have 4,000 MW to 5,000 MW of solar equipment manufacturing capacity by 2022, including 2,000 MW production capacity of poly silicon, Mr. Srivastava said.

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