The COVID-19 global pandemic has thrown businesses into an unfamiliar playing field and left many scrambling to find a way out of this crisis. We are seeing the steepest slowdown in the global economy (3%) in 2020, since the Great Depression of the 1930s. Although, lockdowns have appeared to be a great way to reduce the spread of this epidemic, confining millions of citizens to their homes have closed down businesses and have dealt a damaging blow to the economy.
It Is the Right Time to Take a Step Forward
However, as the initial panic fades out, the world is beginning to settle down and trying to identify the best path to restore the world and focusing on re-starting the industries.
In such a scenario when the whole world is still reeling from the devastation caused by the COVID-19 epidemic, it is up to countries like India to stand tall and take positive actions that can inspire the world to strive towards a better and sustainable future. To achieve this goal, India must focus towards building its manufacturing scale, as its importance or lack thereof has revealed a fatal flaw for aspiring countries like India in the current epidemic and the following tensions with China (which is the global manufacturing hub and our biggest supplier).
Identifying the Right Path
Investing in green energy sectors, especially in solar has been championed for nearly a decade. Understanding 1,000+ GW Renewable energy potential in India, the Government decisively raised the solar target from 20 GW to 100 GW by 2022.
Besides, aided by manufacturing initiatives and policy reforms like, Make in India, GST, drafting National Policy on Electronics, increasing export incentives, launching phased manufacturing programme (PMP), Modified Special Incentive Package Scheme, and planning a new industrial policy under the current regime consistently increased the FDI inflow within the country and created an environment to support the solar energy adoption and manufacturing industry. However, this promising industry saw growing challenges like solar imports ($1.6 bn in FY 19-20), lack of investment in manufacturing and forex outflow ($102 bn in FY 19-20) through fossil fuel imports.
Now, the spread of COVID-19 and its negative effects have raised a concern more than ever to identify and follow the right path for quicker economic stabilization and growth.
The Argument for Promoting Solar
COVID-19 pandemic is suspected to cost India nearly Rs 10 lakh crore revenue loss due to slowdown in demand and manufacturing contraction. In such a scenario, we need to focus on finding the most profitable sector to promote and invest in. Thankfully, such a promising industry is clearly visible in front of us. We are talking about India’s ‘solar mission’ which focused on solar energy transition of the country. This initiative gave birth to opportunities like building a manufacturing scale, increasing FDI inflow (From 2000 to 2020 (March), $9.2 bn FDI inflow in Indian RE sector), job creation (the solar industry has created 1.6 lakh jobs in 2016-17 and 10 lakh jobs were expected to be created within 2022), aggressive R&D, domestic production of critical raw materials, control over product quality and cost, satisfying energy needs within the country and generating revenue from exports.
These opportunities offered a way out of importing fossil fuel, promised to solve unemployment challenges, give rise to industrialization, and higher revenue generation to initiate socio-economic growth. Therefore, it is fair to say that focusing on solar now is more important as it is capable of transforming India into a superpower supported by green energy reliance.
The need of the hour is control on supply chain and manufacturing industries to maintain the availability of products, maintain production cost, create demand, and create jobs (manufacturing employs ~25% of India’s working population). Government of India understood the importance of scaling the manufacturing industry and came forward with initiatives like ‘Make in India’ to build a manufacturing powerhouse. And as we are going through the crises that are revealing the importance of manufacturing to restore India, initiatives are needed to be enforced that can utilize the opportunities through investment in manufacturing in most promising and profitable industries like solar.
Way Forward
India’s manufacturing economy is expected to reach $1 trillion by 2025 for very good reasons. Steel, fertilizer, cement, refinery products and energy sector in India have shown incredible growth with new reforms and policies being enforced. However, if we are to select the best bet for investment into manufacturing, we should focus on the energy industry as it stands to aid India in becoming independent in energy which directly influences the economy.
Energy and economy are interconnected and although we as a country have moved forward towards clean energy transition ($42 billion invested in the renewable energy sector in India in last 4 years), we have barely scratched the full potential of this industry to lead our country forward (India’s RE sector can attract $10 billion foreign investment annually).
The solar cost has fallen by 90% in the last decade, and this has led to faster solar adoption in India.
Additionally, India can save USD 30-35 Billion of forex reserves with an investment of USD 5-6 Billion in solar manufacturing. Also, in this crisis, there is an immediate need for building energy systems that are low maintenance, easy to handle, and are reliable. Solar: the champion of renewable energy comes with all of these attributes.
Focusing on manufacturing solar will enhance India’s manufacturing prowess and technology leadership, thus flourishing industrial growth, satisfying clean energy demand within the nation and revenue generation through export markets. In a nutshell, it is following the footsteps of ‘Make in India’ and ‘Aatma Nirbhar Bharat’ while reviving and building India’s economy for a sustainable future. Not just saving money, focus on manufacturing solar can quadruple renewable energy jobs to 42 million, expand employment in energy efficiency to 21 million and add 15 million in system flexibility as well.
