NEW DELHI :
India plans to offer land near its ports to companies for building solar equipment factories, as it seeks to attain self-reliance and challenge the dominance of China in one of the world’s largest green energy market, said two people aware of the development.
With 110,000 hectares of land available across a dozen major ports, New Delhi believes that accessibility to a port will not only make it more cost-competitive to make solar equipment, but also facilitate exports. This also is in sync with India’s port-led development strategy to leverage its 7,600km-long coastline.
“The ministry of new and able energy (MNRE), and shipping and ports, are in talks for offering this land for solar equipment manufacturing. The ports have been asked for the identified land,” a senior government official said, requesting anonymity. Queries to shipping ministry and MNRE spokespersons did not elicit any response.
The plan follows the Modi administration’s decision to impose tariff and non-tariff barriers to put a check on imported solar cells, modules and inverters that will make their sourcing from China costlier. Facilitating local manufacturing in sectors, such as solar equipment, is expected to bolster India’s efforts to attract global firms who are planning to shift production out of China following the covid-19 outbreak.
While India is running the world’s largest solar energy programme, as much as 80% of the solar cells and modules used are bought from China, given their competitive pricing. India imported $2.16 billion worth of solar photovoltaic cells), panels, and modules in 2018-19. Logistics comprise about 13% of total costs for Indian companies, making exports uncompetitive vis-a-vis China.
Some of the companies looking to start solar equipment manufacturing in India include Goldman Sachs and Canada Pension Plan Investment Board backed- ReNew Power, which plans to set up a 2 gigawatt cell and module manufacturing plant.
India has a manufacturing capacity of only 3 gigawatts (GW) for solar cells. Recently, Adani Green Energy Ltd, which has a 1.5GW solar PV cell and module manufacturing facility, won a manufacturing-linked solar contract that entails building 2GW of additional solar cell and module capacity. Reliance Industries Ltd is also vying for the clean energy space.
Green energy projects now account for more than a fifth of India’s installed power generation capacity. The country has 34.6GW of solar power, with the aim to achieve 100GW of solar capacity by 2022.
More companies are expected to set up shop here, given India’ new playbook of not using Chinese equipment and technology in the power sector, subsidized financing and prior-permission requirements for imports from countries with which it has a conflict with.
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