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Local companies may get little role in the next phase of solar mission

According to reports, the government has rebuffed the pleas of the domestic manufacturers of solar cells and modules to protect them from a flood of imports. The renewable energy ministry plans to give local players only a small part of the projects to be awarded in the next phase of the solar mission.

“Solar power projects using imported equipment are more cost-viable than those using domestic content,” said Tarun Kapoor, joint secretary, MNRE.

By end of May, government will tender solar photovoltaic power projects worth 750 MW for competitive bidding. Senior officials at the ministry said that it’s likely that a mere 200-250 MW will be kept separate to be built from domestic solar equipment. The balance will be free to procure imported content.

“Keeping in view the financiers and diminutive capacity of the domestic manufacturing, it was opined that the share of non-domestic should be larger,” said a senior official at Solar Energy Corporation of India (SECI). SECI is the newly formed subsidiary of MNRE, which will steer the second phase of the national solar mission. Domestic manufacturers of solar cells and modules have been condemning the government for not supporting the industry, which is incurring a huge annual loss of 10,000 crore and is on the verge of shutdown.

The current capacity of Indian solar manufacturing is roughly 1,000 MW of cells and 2,000 MW of modules.

Most of the units including that of Moser Baer, Lanco and Tata Solar have shut down their manufacturing capacity.

Amount of exports of solar cells and modules increased from 920 MW in 2011 to 1,050 MW in 2012.

The landed price of imported solar cells in India has come down substantially from $1.32 per watt-peak in 2010 to 36 cents per watt-peak in 2012.

“We are also selling at this global price (36 cents/watt-peak) but this is way below our variable costs. We can match the quality but not the price and this has led to manufacturing facilities closing down,” said S Venkataramani, general secretary, Indian Solar Manufacturers’ Association.

One comment

  1. Market price is market price. Indian companies must match the quality and price otherwise projects will be unviable. What Manufacturers and Government have to do is the following:

    a). No compromise on Quality and Delivery of the modules and inverters, if procured from Abroad or locally with replacement warranty and post sales support.

    b). Price also has to be matched till the project site location including all taxes and duties, if procured from Abroad or Locally procured.

    c). Due to high cost of borrowing and huge financial loss on which these Indian units are dwelling, what government can offer is that: The interest subsidy to match the amount of panels supplied by the Supplier with legitimate invoice and receipt from the Buyer of having received the good quality product.

    d). Government can waive off the local taxes to match the imported Panels or Inverters, when such comparisions are transparently made after the ex-works supply (excluding the transportation and its service tax).

    e). Thus the local manufacturers are protected from the Tax burden or Interest load on high financing cost. For sure, government can’t pay for old stocks, inefficient methods of production or import fluctuation of raw materials of these module or inverter manufacturers…..

    f). Manufacturers have to be given an opportunity to prove their good manufacturing capabilities, good procurement capabilities, good quality delivery on time. The Taxation moderation and the interest burden due to high working capital are reduced due to interest subsidy, less applicability of Excise duty, or VAT or such local taxes to match the Imported Price. So, more jobs in INDIA due to such government action.

    g). What Manufacturers should not get into foul play is to always ask for tax rebate, which is a great loss (if imported, government wont get less tax or no tax loss due to high rebate), but, loss of jobs will be a great GDP loss or social unrest.

    h). If the manufacturers can show their price estimation with justification on what interest subsidy they want from Government (the same can be given for two years from National Clean tech fund to save Indian Industry). But, the 30% Capital subsidy is already eaten away by these manufacturers, SEZ benefits have also been enjoyed by these manufacturers, so, what more support needed must be shown on papers vis-a-vis low interest loans available from abroad, low cost materials etc….Forex fluctuation risk must also be shown to address properly, instead of asking for Anti dumping duty….. why cry after enjoying all the benefits and still not competitive?? Play a fair game with such paper for many learned to comment and write to the government…..and to save jobs in INDIA.

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