The government is ready with tenders for an addition of 20 gigawatt (20,000 mega watt) solar power, with the successful bidder mandated to have production facility to manufacture nearly half the equipment requirement.
The generation capacity is proposed to be added over the next three years and is one of the most ambitious programmes undertaken by the government so far, as it seeks to ramp up renewable energy production in the country from around 70 GW to around 225 GW in four years.
The first tender is ready to be issued and addresses concerns related to domestic manufacturing that resulted in India being pulled up at the WTO after the US lodged a complaint at the multilateral agency. As a result, the tweaked plan does not insist on using locally-manufactured panels and modules for the government programme. Instead, companies with manufacturing facility can use the production base for exports to other countries. The idea is to ensure that the entire production chain is set up in the country as part of the thrust to the Make in India initiative.
The local production clause along with the duties on imports, including the recently-imposed safeguard duty to protect local industry, are aimed at creating domestic manufacturing capability in an industry where China is increasingly gaining muscle. The strategy also emanates from the experience in the mobile handset space where India is at best an assembly base for low-end phones with the production chain missing. Large orders are expected to provide the much-needed confidence to global players to invest in a manufacturing base in India.
When asked about the Centre’s latest move, SoftBank founder and chairman Masayoshi Son said, “In the long-term, ‘Make in India’ is supposed to be good. In the short term, it becomes a burden because the Chinese panels are cheaper due to their scale and the manufacturing ecosystem… You need the entire ecosystem, which goes beyond assembly. It has to be much deeper than panel assembly to include R&D, technology, new IP, materials, deep engineering, even glass, which is not normal glass. You need sophisticated engineers and not just assembly technicians.”