As the government trains its focus on local manufacturing of solar power equipment as part of its strategy to make an ‘Atmanirbhar Bharat’, Indian solar equipment manufacturers are toeing the line and scaling up capacities. Some of the firms that FE spoke to have revealed plans to add over 4-5 giga watts (GW) of new capacities each, over the next 2-3 years.
The government is planning to introduce a basic customs duty — starting 20% or thereabouts and designed to increase further to 30-35% — from August this year to safeguard the domestic manufacturers’ interests. This is in sync with calls to make India self-dependent.
Indian manufacturers Vikram Solar and Waaree Energies, which have 2GW solar manufacturing capacities each, told FE that they could easily ramp up their individual capacities to 5-6 GW. They want government policies to enable a further pruning of their manufacturing costs. Renewsys Solar and Waaree Energies too have similar capacity augmentation plans.
Saibaba Vutukuri, CEO of Vikram Solar, said, India may have 60 GW of solar manufacturing capacity by 2024. If the entire additional capacity creation depends on imports, that would necessitate a foreign exchange outflow of around $18 billion. But setting up of commensurate capacities in India would require only $4 billion investments, he said. “It is wise to set up that capacity in India as it will also create 2-3 million jobs as well.”
“We plan to add at least 1 GW each of cells and modules capacity, and add 500 MW each of wafers and ingots provided the government comes out with a clear policy in the next couple of months,” Vutukuri said. Similarly, Waaree Energies plans to double its capacity in the next three quarters if a clear policy comes in the next 30 days.
Hitesh Doshi, chairman and managing director of Waaree Energies said, “We have been growing every quarter. From 30 MW we have grown to 2 GW in the last few years. If a clear policy comes in the next 30 days, we will increase our capacity to 4 GW in three quarters. However, we need alignment of manufacturing costs such as finance cost, power cost, land and other support to compete with China,” Doshi said.
Officials believe it is good to know that government plans to take the BCD to 40% over the next 2-3 years, but sought support in terms of interest rates and power costs. The Chinese interest rates are around 5%, while Indian rates are around 11-12%. The Chinese power costs are around 50% of Indian costs and they also get free land from the government.
The officials demanded that the solar sector should be built on the lines of automotive sector in the country, which took shape in the country between 1995 to 2005 due to strong regulatory and government push. “Indian government did not allow international companies to come on their own initially. They had to form JVs for 5-10 years, after which large companies were allowed to come in, which led to the creation of an ecosystem. It is a big success story,” Vutukuri said.
The companies want the list of manufacturers to be updated fast which will be introduced on October 1, 2020, and the cost differentiation with China to be calculated along with precautions for dumping for creation of manufacturing hubs in the country.
“It will be difficult to compete with the Chinese in the current context on pricing as the demand has still not picked up and some states have still not allowed operations to start due to Covid. The utilisation is somewhere between 20-30% even after the relaxations,” Doshi of Waaree Energies said.
Avinash Hiranandani, CEO of Renewsys Solar, said, “We are working on a plan to increase the capacity of cells by 5-times and modules by double in the next six to nine months as soon as the basic customs duty is announced. We are likely to invest around Rs 700 crore in debt and equity on the expansion of capacities,” Hiranandani said.
Renewsys has a cell capacity of 130 MW which will be expanded to 550 MW, and an additional 1 GW capacity will be added to 750 MW module capacity, Hiranandani said.
Dhruv Sharma, CEO of Jupiter Solar, that has 400 MW solar cell manufacturing capacity, wants to double the cell capacity to 800 MW after the BCD announcement in the next 9-months. “We are also planning to tie up with cell manufacturers to produce other raw materials like wafers and ingots given the demand scenario by 2021,” Sharma said.