International firms have started expressing interest in setting up solar cell and module production facilities in India following several measures by the government to promote the same.
According to media reports, US-based 1366 Technologies is looking to invest $300 million to set up a facility in India for solar wafer and cell production. The company is backed by Bill Gates’ Breakthrough Energy Ventures and has North Bridge Venture Partners and Polaris Partners as investors.
The company plans to set up the production facility under the Indian government’s production-linked incentive scheme and is looking for Indian companies to partner with.
India currently has only 3 gigawatts of solar cell and 15 gigawatts of module production capacity. Despite the high demand for solar modules, this production capacity is believed to be highly under-utilized as developers prefer cheaper Chinese imports. The Indian government has taken a number of measures to reverse this market practice.
The Indian government currently imposes a 14.8% safeguard duty on imported modules. From April of next year, imported cells and modules will attract a 25% and 40% customs duty. An investigation to impose anti-dumping duty on cells imported from China, Thailand, and Vietnam is also underway.
The most attractive policy initiative for cell and module manufacturers, however, is the recently launched production-linked incentive scheme. The government will offer $600 million to companies setting up new production facilities. The amount of incentive will be linked to actual sales and efficiency of cells and modules produced. The government expects to incentivize the development of 21 gigawatts of production capacity over the next few years under this scheme.
Earlier this year, the Ministry of New and Renewable Energy issued a list of manufacturers that have been approved for the supply of modules to project developers. All new projects auctioned must use modules mentioned in this list. So far, only Indian modules and manufacturers have been added to this list.
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