Policies & Incentives Needed to Boost Domestic Solar Manufacturing: Saibaba Vutukuri, Vikram Solar

Saibaba Vutukuri, CEO of Vikram Solar, has said the domestic solar industry needs a comprehensive policy framework to boost manufacturing.

As the industry awaits the Union Budget, Saibaba Vutukuri, CEO of Vikram Solar, has said that he believes there is an immediate need to build a robust eco-system for indigenous solar manufacturing and making it cost-competitive to achieve the Government’s vision of Aatmanirbhar Bharat. Stating that the domestic solar industry needs a comprehensive policy framework encompassing both tariff and non-tariff barriers, long term financial support and direct incentives to make it cost-competitive. 

“We are hopeful of targeted initiatives and policies for scaling-up the domestic solar manufacturing aligned to the 450 GW renewables by 2030 target,” Vutukuri said. 

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Vutukuri who leads the West Bengal based solar module manufacturer and solar solutions provider further suggested that the finance ministry should consider a 5 percent Interest Subvention on term loan and working capital, upfront Central Financial Assistance (CFA) of 30 percent on CAPEX, increase export incentive from 2 percent to 8 percent under Remission of Duties or Taxes on Export Product (RoDTEP) which will aid indigenous solar manufacturing.

Vutuukuri then went on to highlight that the industry is still waiting for the implementation of Basic custom duty (BCD) with exemption to Special Economic Zone (SEZ) based solar manufacturers and the Production Linked Incentive (PLI) scheme. 

“In our view, bringing down Minimum Alternate Tax (MAT) for units operating in SEZs, extending Section 10 AA of Income Tax Act till 31st March 2022 for SEZ based solar manufacturing unit, preferred interest rate support and priority lending support for manufacturing units, availability of National clean energy fund (NCEF) for expanding solar R&D are critical to augment domestic solar manufacturing,” he said.

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Additionally, “we recommend, the Government to consider implementing tariff barriers like BCD/Safeguard Duty/ADD for at least 4-5 years. Offering a capital subsidy of 50 percent for setting up R&D and quality testing infrastructure within the manufacturing units will help build scale. Also, super-deductions of 200 percent of the R&D expenditure for new and clean solar technology development should be allowed. India already offers super-deduction of 200 percent of the R&D expenditure in emerging areas such as biotechnology which has led to the rapid growth of Indian biotech and pharma companies,” he added.

Moving on from the solar industry, Vutukuri said that considering the importance of the Electric Vehicle (EV) battery ecosystem in a solar smart nation, “we recommend special funds to be allocated for this development.”

By implementing these policy recommendations, he believes, will not only encourage economic recovery amidst the pandemic but will also provide an enabling eco-system to make India the global manufacturing hub for solar.