India's Solar Sector faces headwinds as capacity addition slows down: CRISIL
India has set an ambitious target of having 175 GW of renewables including 100 GW of solar energy by 2022.
- India’s target of adding 100 GW of solar project capacity by 2022 is facing headwinds as lack of clarity on policy, frequent bid cancellation and safeguard measures have negatively impacted the sector, a market research has revealed.
- The country’s installed solar capacity is expected at 60 GW by FY 2022—40 GW short of the government’s target—and 70 GW by 2023, a research conducted by CRISIL
- The report noted that inconsistent policy measures on part of the government have dampened the investors’ sentiment in the sector, thereby leading to a slowdown in the capacity addition.
- As against a record solar capacity addition of 9,000 MW in 2017-18, the current financial year is expected to add 6,500-7,000 MW project capacity. FY 19-20 is expected to add around 9,000 MW and the numbers are expected to stabilise thereafter—to the tune of 10,000 MW-12,000 MW till FY 2023.
- One of the key factors which lead to a downward revision of estimates include the safeguard duty imposed last year on imports of cells and modules.
- Last year, the Finance Ministry approved Directorate General of Trade Remedies’ recommendation to impose up to 25% safeguard duty on imported solar panels and modules. The duty, effective July 2018 onwards, is to be levied at 25% for the first one year, 20% for the next six months, and 15% for the following six months, after which it is to be phased out.