Now India wants to build up its manufacturing capacity in renewables, with the government launching a scheme in 2021 to increase “made in India” components for clean energy projects to reduce imports and boost self-reliance. — AP
INDIA’s solar power market may be growing rapidly but Girish Mansukbhai Solanki’s business, a small labour agency that supplies workers to companies setting up solar systems in western Gujarat, has been making losses.
”I am at the bottom of a supply chain that is plagued with delayed projects, delayed payments and a lot of uncertainty,” the 38-year-old said over tea in Rajkot, an industrial town home to many solar firms.
Solanki has stopped taking calls from manufacturers and solar service providers seeking manpower because their slim profit margins put them at risk of financial trouble, he said.
Small-scale solar manufacturers and service providers like Solanki are regarded as important players in India’s push to achieve a national goal of installing 270 gigawatts (GW) of solar power capacity by 2030 – enough to power about 200 million homes.
In an industry driven by government policy, these firms are also key to generating green jobs, with even the smallest hiring at least 25 workers, according to manufacturers’ associations.
India’s micro, small and medium-sized enterprises (MSMEs) – which number about 60 million across all sectors – generate the largest amount of employment after agriculture, and foster entrepreneurship at a lower capital cost than large-scale manufacturing.
Yet, despite their role in fostering skills and inclusive growth, many in the solar value chain are floundering as larger companies enter the market, states impose strict tender rules and the government tightens quality controls, imposes mandatory certification for components and ramps up costly on-site checks.
These conditions have made it hard for MSMEs to bid effectively for government-backed solar projects from setting up solar-run agricultural pumps to rooftop systems and micro-grids.
Once considered pioneers in the business and credited with creating early awareness among consumers, MSMEs are now operating as sub-contractors and sales agents for big companies that are cornering most solar projects across the country.
Many like Solanki are either diversifying, shutting down or downsizing – with knock-on effects for employment.
“The plot has been lost for MSMEs, with many struggling to retain a foothold in the solar market,” said Gulabsing Girase, director of Gro Solar Energy Private Ltd, a firm he co-founded after leaving the Maharashtra State Power Generation Company.
Large players are entering even the rooftop solar market which was dominated by MSMEs until a few years ago, he noted.
“Businesses set up by borrowing from family and friends are getting marginalised – and the benefits of the booming solar market are slowly getting consolidated into the hands of a few big companies,” he added.
Now India wants to build up its manufacturing capacity in renewables, with the government launching a scheme in 2021 to increase “made in India” components for clean energy projects to reduce imports and boost self-reliance.
It offers tax benefits, subsidies for capital costs and concessions to manufacturers that source raw materials from the domestic market.
Under the scheme’s second tranche, 11 mid-to-large manufacturers have benefited from government allocations of nearly 40GW of solar photovoltaic module production, with incentives continuing for five years after new plants are commissioned.
The scheme is expected to lead to increased investment and expansion of solar PV manufacturing, as well as a boost to employment, including about 30,000 direct jobs and 120,000 indirect jobs, according to the government.
Abhishek Jain, a fellow and director of the Council on Energy, Environment and Water (CEEW), an India-based think-tank, said MSMEs have a big part to play in energy transition as large firms lack a presence on the ground to execute projects.
“But there are challenges smaller companies face – from limited direct interface with the government, to exclusion due to steep tender requirements,” he said.
Researchers point out that big companies offer more competitive prices, making clean energy solutions more affordable for customers, and are easier for governments to manage than dealing with many hundreds of smaller players.
But, they say, MSMEs could create millions of jobs, boost domestic production of solar components and promote energy security if given financial support and better opportunities to bid for projects such as smaller solar plants and solar pumps in rural areas.
Rajesh Joshi was an early entrant into the solar market, after spending two months in Spain researching the nuances of the solar industry.
The growth of his Rajkot-based company JJ PV Solar, which sets up solar systems and manufactures panels, has been closely linked to India’s evolving solar energy policy.
“Back in 2009, I had an inkling that renewable energy would be big in the future and invested in it. I made losses for four years, frequented government offices all the time and managed to survive,” he said.
His determination was borne out, with solar now making up more than half of India’s renewable energy capacity – and Joshi serves as chairman of the Federation of Solar Manufacturers and Intermediaries, representing 150 members.
India is working to boost non-fossil-fuel sources of power – solar, wind, nuclear, hydro and biomass – to meet a goal of 500GW of clean energy capacity by 2030, as it looks to reduce its climate-heating emissions by 45% from 2005 levels this decade.
Both Solanki and Joshi said small enterprises had been efficient and completed projects on time, noting their essential role in driving industry growth.
“But if we are not supported with easy access to working capital, we will not survive,” said Solanki, displaying his phone with dozens of messages from solar firms seeking labour.
“And if we become sub-contractors for big companies, it will kill our entrepreneurial spirit,” he added. — Reuters
