“Let’s compete on quality and innovation”: Vikram Solar CFO


pv magazine: Suddenly, there has been a dramatic fall in India’s exports to Turkey. At the same time, Vietnam and Denmark emerged as big markets. Can you please explain the trend?

Dramatic indeed, in FY 2018-19 India’s solar exports to Turkey went down by 99% from previous year. And the reason behind it is Taiwanese green energy industry targeting Turkey’s domestic solar demand.

Taiwan is the second largest PV cell maker in the world and it is rapidly increasing domestic module manufacturing capacities. In competition with China, solar manufacturers in Taiwan are setting up complete supply chain to reduce the production cost and undercut the markets in other countries.

That is how they have gained a huge market presence in Turkey, while Indian manufacturers had to step back as they were not able to match the solar equipment cost with Taiwan.

At the same time, the solar power markets in Vietnam and Denmark have shown incredible growth, driven by electricity demand and supportive government policies.

To meet the growing electricity demand, Vietnam needs to add 6-7 GW of capacity annually at a cost of US$148 billion by 2030. Their government aims to increase renewable power output from 58 billion kWh in 2015 to 101 billion kWh by 2020 and 186 billion kWh by 2030.

That will be equivalent to 7% of the total supply in 2020 and 10% in 2030, and go a long way in ensuring energy security, environmental protection and sustainable socio-economic development.

On the other hand, besides growing energy demand, concerns regarding the high carbon footprint of conventional power plants aided Denmark in increasing the demand for solar power plants.

A wide range of drivers such as feed-in tariffs, incentives, availability of finance from unilateral and bilateral agencies, significant investments across value chain and presence of key players are shaping the future of emerging solar power markets like Denmark and Vietnam.

pv magazine: Going seems to be getting tough for Indian solar manufacturers with the country’s solar cells and module exports to US losing preferential treatment. How do you explain the overall impact?

It should be considered another major blow to the Indian solar industry.

Although the U.S. imposed safeguard measure on imports of PV cells and modules on January 23, 2018, Indian exports were exempted as India was a beneficiary developing country on the Generalized System of Preferences (GSP) list.

However, with U.S.  President Trump deciding to terminate India’s designation as a beneficiary developing country under the GSP, and removing India from the WTO member list of developing countries that are exempted from application of the safeguard measures on PV cells and modules, Indian PV cells and modules exported to the U.S. will come under the ambit of safeguard duty.

In 2018, 47% of India’s solar exports went to USA. Therefore, ending India’s designation as a beneficiary developing country will adversely affect the solar manufacturers in India and create issues of capacity un-utilization leading to huge financial losses.

Indian solar manufacturers are already losing foothold in the domestic market due to continuous solar imports as even after the imposition of safeguard duty, imported solar equipment are cheaper than domestically manufactured equipment.

And now the requirement to pay 25% duty to gain access to the US market would be an expensive and un-realistic proposition for the Indian manufacturers.

pv magazine: What alternatives are left for India?

Besides the U.S., the European Union (EU) had been the second biggest export market for Indian solar manufacturers (including Vikram Solar) until September 2018 when the EU removed the minimum import price (MIP) on panels from China—a move that opened the doors for China to practically dump its products in the EU market.

Currently, Indian solar manufacturers are finding it challenging to match aggressive pricing of Chinese solar equipment within the EU market as well.

Although Indian solar manufacturers will now target the Africa, The Middle East and North Africa (MENA) region, and other rapidly growing solar markets to export, the only hope is for the Government of India to provide incentives on exports—just like China—and help domestic solar manufacturers to go toe-to-toe with the global suppliers.

It is very important to claim the export market in solar industry as this will generate huge revenues while reducing forex outflow (on fossil fuels) for the country and initiate industrial growth.

And we are certain that with the leaders of solar revolution in India returning to power, domestic solar manufacturers will be facilitated to move forward in the export market.

Like other global players, is Vikram Solar too considering a manufacturing base in Vietnam?

We have elaborate plans to enhance our manufacturing capacity from current 1.1 GW per annum and establish new manufacturing bases in multiple countries. We will let you know shortly about the developments in due course.

pv magazine: The government recently brought some big proposals for the solar industry. What way are they going to impact developers and manufacturers?

The power minister’s proposal to remove the priority-sector lending limit for green energy projects is a welcome step for the industry as it will address the drying financial stream for renewable energy projects.

Research shows that investments in India’s solar sector declined 15% year-over-year due to a slowdown in installations. Additionally, liquidity crisis in non-banking financial companies and stressed assets in the thermal sector have led to shrinking financing options for the renewable energy sector.

With this decision, Reserve Bank of India and other banking institution will surely provide sufficient credit lines for faster green energy adoption in India.

The moves to resolve the matter regarding Goods and Services Tax (GST) and inverted duties on renewable projects, and remove the hurdles in land acquisition are also expected to support developers.

pv magazine: Going forward, what changes would you like to see in government policies?

As a solar module manufacturer, we see the government’s intent to promote domestic manufacturing of renewable energy equipment. Speeding up the solar growth in country will subsequently help the manufacturing industry utilize its wares.

However, considering India’s growing solar imports, and the country losing its foothold in export markets like USA, a robust manufacturing policy is needed for the Indian solar industry to successfully satisfy in-country demand for greener environment.

As we have already explained, recent discussion held by the Minister for Power and New & Renewable Energy is expected to increase the investment in the renewable energy and especially solar sector.

As a solar manufacturer, we would like to suggest a higher focus on innovation and quality/performance improvement of solar equipment. It is the only way to gain presence in national and international markets. There is also a need for government incentives and subsidies to make the finished product (solar modules) cost competitive with the foreign suppliers.

Alongside this, penetration in the untapped and emerging solar markets globally will also support domestic solar manufacturers to generate revenue.


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