Indian Solar Industry- A Rising Sector for SMEs
Updated: Oct 16
Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India is ranked fourth in wind power, fifth in solar power and fifth in renewable power installed capacity as of 2019. Increased support of Government and improved economics has made sector become attractive from the perspective of investors. India’s solar industry imports around 80% from China which includes solar panels, inverters, power electronics or even the solar cells, back sheet materials for Indian solar manufacturers.
The present scenario of trade ban and pandemic had led to a shortage in cells and modules and even in other ancillary parts which is not easily available in India and mostly import dependent. As a blessing in disguise, these mentioned restrictions have raised a call for many domestic players to set up manufacturing facilities delivering to the demand of solar industry. Solar industry, post pandemic period is likely to come out stronger. With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.
Data released by Department for Promotion of Industry and Internal Trade (DPIIT) states that more than $42 billion has been invested in India’s renewable energy sector since 2014. As of 2019, India was set to open its solar power plant, Bhadla Solar Park in Rajasthan, which would be world’s largest solar plant with a capacity of 2,255 MW. The international equity investment in the India’s clean energy sector was US$ 283 million in 2016, US$ 532 million in 2017 and US$ 1.02 billion in 2018.
The government is taking steps by coming up with few manufacturing-linked tenders for setting up solar capacities and has also introduced basic custom duty on imports. The Government has taken keen interest in building skills for jobs with schemes like Surya Mitra Skill Development. Indian government needs to bring in various policy initiatives that can ensure scale and profitability, inducing manufacturers to increase production, which will not just cater to the domestic market but can also be exported.
India has abundant availability of solar irradiance and receives solar energy throughout the year. This has created enormous opportunities to exploit solar energy from the sunniest sites in the country, especially, Rajasthan, Gujarat and Andhra Pradesh. New ventures by SMEs are being welcomed with huge benefits promised by the government.
With technological advancement and increase in solar adoption, SMEs are being encouraged to enter the manufacturing business of solar photovoltaic (PV), semiconductor, micro electronics, LED and flat panel display equipment which also have an existing market in the electronic industry.
Solar cells, batteries, micro controllers, chargers, controllers are the market segment which have opportunity for SMEs to set up their manufacturing business. This is based on a study conducted by Semiconductor Equipment and Materials International (SEMI) India on increase in solar adoption by Indian population.
Large enterprises are in constant search of collaborations with SMEs in their production of solar batteries which has seen an exponential growth in both domestic as well as international market. The number of SMEs in the electronic segment currently catering to the solar industry is fewer and there is a huge opportunity from both solar as well as electronics market for SMEs entering the battery manufacturing field.
Niche opportunities like off grid solar power storage are areas where SMEs can invest in with huge promise of revenue generation. Research and development into these niche areas is also another sector SMEs can set up laboratories or quality testing centres.
With huge financial support from government combined with increasing demand in use of solar PV systems, solar lightings, solar pumps in various public systems and public areas SMEs have huge opportunities in manufacturing these to cater the domestic or international demand of the products mentioned.
SMEs emerging in this sector are urged to invest in technologies such as direct wafer manufacturing, hetero junction and tandem cell production and bifacial module. These are the areas where innovation in every part of the value chain and strategically collaborate with global innovators have to take a generational leap in solar industry.
NITI Aayog key members have urged the manufacturing industry to harness the resulting demand to invest in manufacturing lines and collaborate with start-ups and research institutions to continue to increase the performance of the solar panels produced and reduce their cost. We will see a lot of collaborations happening in the power electronics space, with companies abroad extending technology know-how to local partners and manufacturing power electronics, especially big components like inverters. All together the sector is looking more promising in terms of setting up small enterprises in the supply chain of solar industry