Solar Power Plant
A representational picture: A US delegation seeks to invest in eco-friendl" power projects in India. [Representational Picture]Reuters

To help solar power equipment manufacturers in India, the government should provide support by extending incentives, tax holidays and other sops, opined Indian Solar Manufacturing Association (ISMA) and KPMG, a business advisory company.

The Indian solar equipment makers face tough competition from China, which sells the equipment 25 to 30 percent cheaper than the Indian makers.

In a study, which was released on Thursday, both ISMA and KPMG urged the government to encourage Indian solar power equipment manufacturers by taking several measures to help them.

The study has drawn similarities between the industries of solar manufacturing and electronics manufacturing. The government should provide incentives to both electronics and solar power equipment makers in India, ISMA-KPMG said in a statement.

India imports over $30 billion electronic goods every year and electronic items have become the fourth largest import item in India, contributing 23 percent of trade deficit, the study said. India could have prevented the situation if the government had supported the industry in the initial state itself.

Association president Ashwani Sehgal said that the Union government should provide incentives, such as loans at reduced interest rates, credit guarantees, capital subsidies, tax holidays, anti-dumping measures and preferential domestic procurement to domestic solar power equipment manufactures. Such incentives are being extended to domestic solar power equipment makers in counties like the US, China, Japan.

"Indian solar manufacturing is competitive but suffers due to lack of incentives that are provided to other nations. Forty per cent of Indian solar producers have shut down with the industry utilisation at just 21 per cent," Business Line quoted Sehgal.

Drawing comparisons between Indian domestic solar power equipment manufacturers and their counterparts in the US, China, Japan and other such countries, Sehgal said that Indian solar manufacturing is competitive but suffers due to lack of incentives.

40 percent of Indian solar producers have shut down with the industry utilisation at just 21 percent domestically, he added.

Sustainable domestic manufacturing of solar power equipment can save upto $42 billion worth of equipment imports, the study states. Besides, such domestic manufacturing of solar equipment will help create 50,000 direct jobs and another 1.25 lakh indirect employment to the people.

By 2030, India is estimated to install solar power units with a capacity of 100 gigawatts.

Santosh Kamath, Head of Renewable Energy at KPMG, stated that the government's support to the domestic solar power equipment makers will help in the reduction of solar power price in the long run, though the price may be moderately higher in the short run.

Once the scale of solar power generation and supply chain in India increases, price of solar power will come down considerably, he added.