How are SMEs operating in Solar Industry contributing to Indian Economic Growth

India is the world’s third-biggest manufacturer and fourth-biggest purchaser of power on the planet. 

Under Prime Minister Narendra Modi’s energy plan, an aggressive objective has been set for the production of renewable energy, with an expectation to increase renewable capacity on the grid from around 57GW in May 2017 to 175GW before the finish of 2022. Wind, Water and solar energy are the most cost effective energy sources. As of 2020, India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity. The need for sustainable solar energy is huge for India’s manufacturing sector as well as industries that require higher power. 

India has roughly 64 million SMEs which make up a huge share in India’s GDP of around 6.11% in the manufacturing sector and 24.63% in the service sector and are contributing to the economic growth of the nation. The SMEs (Small and Medium-Sized Enterprises) are more focused on the production of solar modules, assembling and service of solar panels. The SMEs are producing non-cell components like glass, ribbon and EVA sheet which constitute 30 to 35% of the total module costs and is much more job intensive. 

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SMEs working in the production of solar modules and the manufacturing sector are trying to get a part of the pie of the 19.5 thousand crores for the high-efficiency solar module manufacturing budget announced by the Indian government. This capital will enable SMEs to create a strong transformation of the economic sector in the country. 

The installed renewable power generation capacity of India has increased multifold to a CAGR of 17.33% between FY16-20. Department for Promotion of Industry and Internal Trade (DPIIT), FDI mentioned that the Indian non-conventional energy sector had an inflow of US$ 10.28 billion between April 2000 and June 2021. More than US$ 42 billion was invested in the renewable energy sector. In March 2021, a new loan guarantee programme worth US$ 41 million was introduced by the US Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) to promote Indian SMEs which are working in renewable energy sector.

In an online event titled “Atmanirbhar Bharat – Opportunities in Solar & MSME”, Union Road Transport Minister Nitin Gadkari posited the importance of rooftop solar production and why SMEs need to accelerate their participation in the renewable sector. He addressed the challenges SMEs are facing including lack of capital to enter the solar production market, lack of access to quality materials and trusted vendors, insecurity over profitability for the long term and sustainability. The Indian government is planning to promote SMEs by offering more schemes to support the acquisition of sufficient capital and raw materials procurement.

Conclusion

The covid pandemic has resulted in debilitated losses for companies and SMEs are finding new methods to increase efficiency in innovation, production, operation and cost management to continue to function. SMEs operating in the solar industry are contributing significantly to national economic growth and will continue to thrive in the coming years. OfBusiness has been working tirelessly to promote SMEs to become large companies with more than 7,00,000+ registered SMEs with the company. It also acts as a one-stop solution for all raw material needs.