How can solar power sector drive India's economic growth and make India Atmanirbhar?

The economic slowdown we have seen due to COVID-19 and so it is necessary to make India Atmanirbhar. And in this, solar power sector can play an important role. According to the Observer Research Foundation (ORF), ramping up solar energy generation and equipment manufacturing can make the economy of India sustainable and Atmanirbhar.

As per the announcement made by the Prime Minister Narendra Modi focusing towards 'Make in India' therefore India's solar energy has a welcoming opportunity to boost the domestic economy and make it's economy 'self-reliant' the post-pandemic era. India's ambitious target of achieving 100 GW of solar capacity by 2022 has been disrupted from China due to coronavirus.

Now let us have a look at the paths that can lead to economic recovery post-COVID-19.

As countries in the world are generating plans for the recovery of economic growth post-COVID-19 Pandemic, in fact, several debates have been started to choose the correct economic growth model. Do you know that the old quantitative Economic Growth Model was dependent on fossil fuels for energy and the new qualitative economic growth model dependent on renewable energy?

In fact, major countries in the world have shown a clear shift from an old economic growth model to a new economic growth model. Like European Green Deal should be central to a resilient recovery after COVID-19. Even South Korea to implement Green New Deal after ruling party election wins.

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What is India's stand in this?

India showed a commitment to use clean green renewable energy for economic growth. By 2022, India has set itself of 175 GW renewable energy capacities including 100 GW of solar and 60 GW of wind power capacity.

But the generation of solar energy and solar equipment manufacturing sector has not received the due importance in Atmanirbhar Bharat Abhiyan.

How solar power sector can make Atmanirbhar Bharat?

No doubt India has a great potential for the generation of solar energy. It is a tropical country that is around 300 clear sunny days in a year. In various ways, the development of solar sector can help India in achieving Atmanirbharta or self-reliant.

- It will create employment.

- It will lead to rural development.

- On the other hand, there will be a reduction in fuel import bills.

- It will also reduce the dependency on oil-producing countries.

- Installation of power generation units at a faster rate.

- Also, it will support a clean environment and will enhance the quality of life.

If we see employment generation sector then solar power sector can provide employment to all kind of labours including skilled, semi-skilled and unskilled in several activities like manufacturing of solar equipment, development of solar power plant and installation and maintenance of Roof Top Solar Panels.

In solar power sector demand of installation of roof-top solar panels will generate entrepreneurship and jobs in rural India. Availability of power will promote cottage and small scale industries in rural India. The income disparity gap will also be bridged between rural India and urban India.

It has been seen that since 2013-14 till 2018-19 import of coking and non-coking coal is increased and for this, we are dependent on other countries. Not only this, but the financial year oil import bill also increases every year. India is amongst the fastest growing economies but largely it is dependent on imports of energy. Here, at this point, the sustained growth dampens and the Indian strategic interest is at risk. Here, non-conventional energy sources like solar energy, wind energy etc. are the key sources.

But to construct a 500 MW capacity solar plant it takes around 18 months and to construct thermal or hydel plant might take 2 to 3 times more time. The point to be noted here is that the cost of construction and financing for a new solar plant is 14% less than that of a thermal or hydel plant.

The ground reality is that the solar power sector of India is heavily dependent on China. Having an ambitious target of solar power generation, India has solar cell manufacturing capacity of about 3 GW annually but the average annual demand is 20 GW. From top 10 India's module suppliers 7 are from China firms. India had already imported around $16 billion worth of solar equipment in the past five years. And by 2030, India may import around $42 billion of solar equipment.

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Therefore, it is clear that India needs a solar manufacturing strategy.

Manufacturing of solar equipment occurs in four phases:

- Semiconductor Ingot production.

- Semiconductor wafer production from Ingot.

- Photovoltaic cell manufacturing from a semiconductor wafer.

- Solar panel manufacturing by assembling photovoltaic cells.

India lacks in the production of these semiconductors. Also, to achieve self-sufficiency in solar equipment manufacturing, India needs a strategy, a new solar sector development policy that is focused on three issues namely:

- To develop a core competency in semiconductor manufacturing.

- To subsidise solar manufacturing sector, the government need a proper policy.

- Also, it is necessary to reduce the cost of capital or cheap loans.

Manufacturing of solar cell process is a technology and capital intensive. As discussed above solar PV manufacturing involves polysilicon, wafer, cell and module assembly, most of the Indian companies are engaged in later processes of module assembly. In capital intensive processes of silicon and ingot production, India has no technological expertise. It is to step up its own research and development of cost-effective, indigenous, next-generation solar panel manufacturing technology.

So now it is clear that ingot formation and wafer production comes in the semiconductor manufacturing industry. In semiconductors, Indian companies have no learning background when the solar industry began to grow from 2011. To develop this capacity for the future, state governments have to support the production of semiconductor as part of a determined industrial policy. According to experts, the human and technical learning curve could be of 5 to 10 year. Subsidies are needed to be provided by the government for the development of solar sector including land acquisition, raw material procurement, labour laws, tax and export policy.

Therefore, to develop solar manufacturing facilities it would require high upfront costs. The cost of debt in India is 11% or highest in the Asia-Pacific region as compared to 5% in China. A huge opportunity has been opened under Atmanirbhar Bharat Abhiyaan for India's solar ambition. And it is the time for the government to implement the required reforms on the ground level.

15th Finance Commission: Meaning, Facts, Members and Terms of Reference (2020-21)