Although the government wants to increase the country’s solar energy production capacity through the Atmanirbhar Bharat program, the performance-linked promotion (PLI) program, and the imposition of high customs taxes from April next year, the industry is in a state of flux in the second Covid-19 wave and uncertainty about recent policy changes. There is uncertainty over the nine-month period between July 31, 2021, when the safeguard duty regime ends, and April 1, 2022, when Basic Customs Duty (BCD) comes into operation. This has made EPC producers and contractors reluctant to continue to expand the capacity and place orders for modules, respectively.

Things were not helped by the discrepancy between the proposed production capacity for the establishment of a Rs.4,500-crore PLI plan and the annual module requirement in the country. Vikram V, head of sector, and AVP of Corporate Standards at ICRA states that at PLI basic levels of Rs 2.25 per watt power, the PLI output of Rs 4,500 crore could support the production and sale of 21GW solar PV modules more than five Season, which translates to 4 GW per year, on the efficiency of the basic module and is considered complete integration back into the proposed units. However, “this remains below the expected annual PV demand for 8-10 GW years in India. Therefore, relying on imported solar PV modules can continue in the near future,” he said.

Recent policy changes have also not addressed the Indian dichotomy which seeks to increase production capacity and curb imports as it remains increasingly dependent on China for the materials used to make solar panels. In any case, given China’s massive integrated operations, and the cost and benefits of technology, domestic solar module players will continue to face stiff competition from other countries. Puneet Goyal, founder, SunAlpha, an EPC solar panel player who buys panels from domestic and Chinese manufacturers, says Chinese panels will remain approximately 5% cheaper than Indian modules despite the PLI program. Contrary to the current upcoming price of Rs 20-22 per watt peak for Chinese panels, Indian panels will cost around Rs 22-23 per watt price. “Indian producers will be very competitive if there is free trade between India and China, and then direct profits will be given to producers in the form of subsidies, subsidies, energy costs, etc.”

In addition, the uncertainty of the transition period between July 31, 2021 and April 1, 2022 has made companies unsure about placing orders for modules, Goyal adds. It is expected that the end of the safeguard duty regime on July 31 this year will lead to the abolition of panels in the country, as the profitability of the costs of importing imports will increase further.

Another issue facing the sector concerns MSMEs. While the PLI program provides benefits to more than 1 GW of plants in the brownfield and greenfield areas, the maximum number of module-producing plants is 250-500 MW, in addition to large ingot-to-cell or wafer-to-cell producers , left out of its borders. Experts believe that as MSMEs form the backbone of the Indian economy, the PLI program should also encourage MSMEs that produce modules and cells. In addition, the epidemic has posed a serious challenge to the future of such units. Hitesh Doshi, chairman and executive director of the Waaree Group, says there is a need for policies that make a difference at the grassroots level. “If the changes are not implemented, it will lead to a major closure of the manufacturing facilities, which will jeopardize 300,000 jobs,” he said.

Source: Financial Express