Made in India or…

Controlling imports tightly can stifle efficiency. Laxity can compromise quality

Published: Tuesday 15 June 2010

Made in India or

imageTwo key objectives of the national solar mission are to bring down costs and to build a strong domestic manufacturing industry for solar equipments.

In late 2009, the government set up a committee under the then secretary of the Department of Industrial Policy and Promotion, Ajay Shankar, to recommend the way ahead. The committee presented its report in February 2010. It is under discussion.

The manufacturing industry has welcomed the report’s key recommendations. “India has the capacity to make over 600 MW PV panels and cells annually,” said Jagat S Jawa, director general of the Solar Energy Society of India, the Indian wing of the International Solar Energy Society. “Till date the industry has exported about 65 per cent of its production but this report will provide ways to use it within India,” he added.

The committee’s recommendations rests on the cornerstone that using only made-in-India products in critical components of solar-power projects would infuse capital into the industry, jump-start new research and ultimately lead to cheaper but better components. This preferential treatment will be time-bound till manufacturers reach an even keel with international giants. The committee reasoned that favouring local equipments would also lead to international manufacturers setting up base in India.

It recommended that only cells and modules made in India should be used in solar-PV plants connected to the grid in the first phase of the solar mission, that is by 2010-2013. All solar installations should use India-made power-conditioning units between 2012 and 2013. At present, wafers and silicons are not made in India. The committee suggested in 2013-2014 the government should review whether the two components made in India could be used.

For solar thermal plants, the committee noted that technology is still new and emerging, so the requirement for domestic content must be small. It recommended a threshold of 30 per cent for localized content in the first year of the mission. The limit could be rapidly scaled up to 50 per cent and above as technology and industry mature.

The committee heard representations from stakeholders. PV makers submitted that Indian producers were using imported solar panels, even though sufficient quality panels are made in the country. The industry claimed the solar mission provided significant subsidies, which should be directed towards the domestic industry so that it generates employment and adds value.

Indian trade laws also discourage production of solar cells domestically. A 12.8 per cent duty is imposed on importing raw material for making cells, whereas there is no duty on importing readymade modules. Inverters that convert direct current from the solar panel to transmission-able alternate current attracts a duty of 21.5 per cent. Currently India does not produce any inverters but imports them.

Deepak Puri, chairman of multi-technology firm Moser Baer, proposed the government allow use of only India-made solar cells and modules for a few years; this would infuse the much-needed money into R&D. Puri said importing panels compromises quality. “Due to strict quality parameters in Europe, a lot of modules are rejected. These may find their way into India,” he said.

Independent solar power producers have a different take on this. For the first phase, the government should let power producers decide whether they want to import or buy local modules, said Inderpreet Wadhwa, president of the Solar Independent Power Producers Association and ceo of Azure Power. “The power producer should be able to customize his solar farm by deciding the size of the panel, the tolerance and efficiency factor and costs,” he said. Wadhwa is using Chinese 280 Wp panels in his solar farm in Amritsar with a power tolerance factor of +5, which means power production can exceed by 5 per cent. In India manufacturers restrict panel size to 230 Wp; these panels have a tolerance factor of +5 or -5. “With higher tolerance, I get more from the same panel,” Wadhwa said.

Making domestic content mandatory could lead to monopolistic markets, which do not worry about improving technology and reducing cost, warned Wadhwa. He said for his projects in Haryana and Gujarat, Indian firms have quoted higher prices than foreign ones.

India does not have the requisite conditions for quality control and certification—for domestic as well as imported products. So concerns are growing about China ‘dumping’ substandard solar cells and modules. But with mandated markets, Indian industry could end up supplying components with poor efficiency at high prices.

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