Prime Minister Narendra
Modi’s government is planning a 210 billion-rupee ($3.1 billion)
package of state aid for India’s solar
panel manufacturing industry, according to two officials.
The so-called Prayas initiative, short for “Pradhan Mantri
Yojana for Augmenting Solar Manufacturing,” a central-government plan designed
to lift India’s installed photovoltaic capacity as well as to create an export
industry, according to two senior government officials with direct knowledge of
the plan. They asked not to be identified because the policy isn’t yet public.
The Prayas program, part of Modi’s “make in India” campaign,
is intended to create 5 GW of photovoltaic manufacturing capacity from 2019 and
build 20 GW of projects in the country by 2026, according to the officials. The
policy, which is being developed by the ministry in charge of renewable energy
and industrial policy, along with the Niti Aayog government research group,
will be presented to the Finance Ministry within a month before going to the
cabinet for final approval, they said.
Catching China
Last month Power Minister Piyush Goyal said in Mumbai that a
policy to encourage domestic manufacturing of solar equipment is in works. When
reached on phone, the spokesman for the power and renewable energy ministries
declined to comment.
India has become one of the biggest clients of Chinese
photovoltaic manufacturers and in the absence of its own domestic capacity,
that reliance could potentially grow. In the first six months of 2016, India
imported 18 percent of China’s production worth $1.1 billion, according to
Bloomberg New Energy Finance.
India’s policy proposal, expected to create thousands of
jobs, is also in response to the industry’s demand for help to the country’s
solar manufacturers, one official said, adding that multiple tenders of a few
hundred megawatts each would be issued for the manufacture of everything from
wafers to modules.
Price Advantage?
The government could offer about 9 million rupees a megawatt
for manufacturing tenders and 5 million rupees a megawatt for local deployment,
according to one of the officials, who said the numbers are subject to change.
The plan “might give a price advantage” if the
manufacturing-hub logistics are “well planned,” according to Bloomberg New
Energy Finance analyst Jenny Chase. Money alone isn’t a sufficient incentive
for companies to set up the most high-tech automated factories needed to
compete, she said.
Japan’s SoftBank Group Corp. told Bloomberg News last month
it’s considering a manufacturing joint venture in India that could produce the
solar panels needed to meet Modi’s energy targets.
“To build large-scale manufacturing efficiency matching
Chinese economics of scale will require government support,” Manoj Kohli,
executive chairman of SB Energy said in an interview in New Delhi. He described
Indian support policies in an “evolution stage.”
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