India’s Solar Boom Is Unique On the Global Stage: Vinay Rustagi

India's Solar Boom Is Unique On the Global Stage: Vinay Rustagi

Let’s start with a light question. How did you enter the solar industry?

After completing my MBA, I specialized in finance and worked in various banks, focusing on project finance for large-scale projects in sectors like telecom, oil and gas, and transport. In 2011, after returning to India from the UK, I took on the responsibility of handling the renewable energy sector. Renewables were booming in India at the time, and I financed several projects, sparking my interest in the sector.

India’s energy landscape was heavily reliant on coal, and there was an urgent need for environmental mitigation. I saw that renewables had a significant role to play, and the sector’s potential excited me. That period was a steep learning curve that fueled my passion for renewables and solidified my decision to build a career in it.

You later founded Bridge to India. What was the vision behind it, and how did you contribute to its development?

Bridge to India was established with a mission to connect international technology and financing expertise with the Indian market. Our aim was to facilitate the entry of global resources into India and help local businesses scale. We partnered with companies like Siemens and Bosch, assisting them in navigating the Indian market.

We didn’t just consult; we also developed rooftop solar projects ourselves. Over time, we expanded into transaction advisory, assisting with investments, mergers and acquisitions, and joint ventures. As we worked, the need for sector data grew, so we began collecting data on projects, policies, and tenders. This evolved into a full-fledged research division, which eventually became central to our operations. We also launched the IND Navigator platform to provide real-time data to stakeholders in the solar sector.

What’s your perspective on the rise of Chinese manufacturers in the sector? Were you surprised by their dominance?

IYes, we were surprised by how rapidly and effectively the Chinese scaled up. In 2007-08, India was a leader in solar technology. Companies like Trina and Jinko hired engineers from India, and many professionals from Tata Power and Moser Baer moved to China to help set up manufacturing plants.

Initially, when Chinese companies began ramping up their capacity, it was seen as a positive development. They brought costs down and improved technology, benefiting the industry. However, over time, their dominance became overwhelming, leading to unforeseen consequences.

We’ve seen PPAs signed at higher rates in the past, like Rs 20-21 per unit. How will these early, high-cost PPAs evolve?

Back in 2009-2010, PPAs were signed at much higher rates, around 12-15 rupees. Many of these contracts are now nearing expiration, and the volume of PPAs has grown significantly. While early discounts were for smaller capacities—200 MW at 15 rupees—today, buyers are procuring 3,000 to 4,000 MW at much lower rates. The impact of these high-cost agreements will fade over time.

India is now pushing to develop its own solar manufacturing industry. Why did India miss the boat earlier, and what challenges does it face today?

After the Chinese entered the market in the early 2010s, India, including both the government and private sector, was too happy to import cheaper equipment. Even in 2014, when a petition for anti-dumping duties was raised, the government backed down, fearing it would increase costs and reduce supplies. The primary focus then was scaling up renewable energy deployment, often relying on imported equipment.

But over time, as China dominated, the situation became unsustainable. The pandemic and the border dispute with China highlighted India’s reliance on imported technology. Solar equipment prices surged by 40-50%, contracts were canceled, and it became clear that domestic solar manufacturing is of strategic importance.

So, how do you see India’s solar manufacturing industry evolving now?

The government has made a strong push to encourage local manufacturing, especially post-COVID-19. However, challenges remain. China’s production capacity, economies of scale, and technology are formidable, and catching up won’t be easy. However, with initiatives like the PLI scheme, there’s growing investment in domestic manufacturing. The road ahead is long, but momentum is building.

Why is it so difficult for Indian manufacturers to match Chinese prices?

It comes down to scale and support. The largest Chinese manufacturers produce 60-100 GW of modules, while India’s top producers are at 3-5 GW. This difference in scale significantly impacts production costs. Moreover, China benefits from advanced technology, a more efficient logistics model, and state subsidies. In contrast, India can’t afford to adopt such strategies, leading to a higher cost base.

As we scale our capacity and localize more of the supply chain, the cost difference between Indian and Chinese modules will decrease in the next 2-3 years. However, India’s procurement costs are impacted by duties on components like glass and aluminum, which Chinese manufacturers don’t face. That said, India remains competitive compared to other countries, like the US, Europe, and Japan.

Could India become a global manufacturing hub for solar products?

Absolutely. India has the potential to become a major player in solar manufacturing. As a more reliable partner, adhering to global standards and market-based pricing, many countries are already looking to diversify away from China and are open to buying modules from India.

We’re hearing about shortages, particularly in the DCR module segment. What’s causing this, and how can it be addressed?

Interviewee: The shortage is driven by increased demand from government schemes like PM Surya Ghar Yojana, PM-KUSUM and CPSU. While supply is increasing, cell manufacturing is more complex and capital-intensive than module assembly. We expect to resolve the short-term supply crunch in the next 3-6 months, with adequate supply to meet demand after that.