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There is no better time than today for domestic solar industry manufacturing having huge potential. However, it needs policy tweaks to make it competitive, according to Saibaba Vutukuri, CEO of Vikram Solar.
He said, “The cost of generating solar energy is the cheapest among all sources of energies and it is going to come down further making it attractive for manufacturers.”
Manufacturing capacity
“In the past 10 years India has developed a 35-40 GW of solar energy capacity. However, we have not developed the manufacturing capacity. We still import about 85-90%, including components and our value addition is about 10-15% at the most.”
“On the other side, in the last 10-12 years, China has taken a different strategy with close to 100GW of manufacturing capacity. India’s cost of manufacturing solar modules and cells is competitive but input costs are very high, that makes us uncompetitive, necessitating more policy support,” he said.
“The introduction of PLI scheme doesn’t mean Indian manufacturers can compete with China. The support that the Chinese government provides to the companies is a lot higher, including 15% incentive to export, enabling them to dump their products into other markets.”
He said, “India needs to levy 40% BCD (basic customs duty) to create barrier to grow the domestic solar manufacturing market in India. Right now, China is 25-30% cheaper in terms of pricing compared to India and if it hits 10% lower, then they will probably start dumping their modules again in India. BCD is single most important factor to help the solar manufacturing industry to grow.”
“The PLI (Production Linked Incentive) scheme is very encouraging and has to give about 10 per cent benefit as against 3-4 %. And it is crucial to bring in the certainty for manufacturing policy and regulations,” he said.
“China has about 100 GW manufacturing capacity and it will take India at least 10 years to be able to compete with China in terms of scale and technology. Therefore, it is very important to create entry barriers against dumping and to create domestic market for internal consumption,” he said.
Vikram Solar Expansion
Vikram Solar is planning to increase manufacturing capacity to about 3-4 Giga Watts and is also in the process of implementing backward integration projects.
According to Saibaba Vutukuri, “At Vikram Solar, we are building 3-4 GW capacity in the next 2-3 years. We have already increased our capacity from 1 GW to 2 GW in the last one year, and we are doing backward integration through solar cells, wafers and ingots.”
“Vikram Solar has been exporting 20-25% of capacity to the US for past 5-6 years. We have been able to sell in US because of some barriers for Chinese products. Due to these barriers, the price differential is still about 5-6%. We can do well in the international market, if we get an export incentive of 6-8%,” he said.
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