INDIA’s solar power market may be growing rapidly but Girish Mansukbhai Solanki’s business, a small labour agency that supplies workers to companies setting up solar systems in western Gujarat, has been making losses.
Despite the growth in India’s solar power market, Girish Mansukbhai Solanki, the owner of a small labor agency in western Gujarat, is struggling to turn a profit. Solanki’s business supplies workers to companies involved in the installation of solar systems.
”I am at the bottom of a supply chain that is plagued with delayed projects, delayed payments and a lot of uncertainty,” the 38-year-old said over tea in Rajkot, an industrial town home to many solar firms.
Solanki describes his experience as being part of a supply chain filled with delays and uncertainty. As a result, he has stopped accepting job requests from manufacturers and solar service providers, as their low profit margins make them susceptible to financial trouble.
Small-scale solar manufacturers and service providers play a crucial role in India’s goal to install 270 gigawatts (GW) of solar power capacity by 2030. These companies are also significant in generating green jobs, with even the smallest of them employing at least 25 workers.
To achieve India’s goal of installing 270 GW of solar power capacity, small-scale manufacturers and service providers are essential. These companies not only contribute to the generation of green jobs but also operate at a lower capital cost than large-scale manufacturing.
India’s micro, small and medium-sized enterprises (MSMEs), which number about 60 million across all sectors, are the second-largest employers after agriculture. These enterprises are also crucial in fostering skills and inclusive growth.
India’s MSMEs are regarded as vital contributors to the country’s employment and economic growth. However, many businesses in the solar value chain are struggling due to the entry of larger companies, strict tender rules imposed by states, and the government’s increased focus on quality controls and certification requirements.
The solar value chain in India is encountering challenges, making it difficult for MSMEs to effectively bid for government-backed solar projects. These challenges include setting up solar-run agricultural pumps, rooftop systems, and micro-grids.
Amidst the challenges faced by MSMEs, many of them are either diversifying their operations, downsizing, or shutting down completely. These actions have adverse effects on employment in the sector.
Gulabsing Girase, director of Gro Solar Energy Private Ltd, explains that MSMEs are losing their foothold in the solar market. He notes that larger players are now entering the rooftop solar market, which was predominantly dominated by smaller enterprises in previous years.
Many MSMEs are struggling to compete with big companies that are monopolizing the solar projects across the country. Businesses that were established with the support of family and friends are now marginalized.
The solar market in India is rapidly consolidating, with a few large companies reaping the benefits. This trend is causing MSMEs to diversify, shut down, or downsize, resulting in job losses.
India is taking steps to enhance its domestic manufacturing capacity in renewable energy. The government has launched a scheme with tax benefits, subsidies, and concessions for manufacturers that source raw materials domestically.
India aims to increase the manufacturing capacity of renewable energy components and reduce dependence on imports. The government’s scheme has already benefited 11 mid-to-large manufacturers, with further investments and expansions expected.
Abhishek Jain, director of the Council on Energy, Environment, and Water (CEEW), emphasizes the importance of MSMEs in India’s energy transition. Large firms lack a presence on the ground, making smaller companies essential for executing projects effectively.
While big companies offer competitive prices that make clean energy solutions more affordable, MSMEs have the potential to create millions of jobs, boost domestic production, and promote energy security with better financial support and opportunities to bid for smaller solar projects in rural areas.
Rajesh Joshi, chairman of the Federation of Solar Manufacturers and Intermediaries, highlights the efficiency of small enterprises in completing projects on time. He emphasizes their essential role in driving industry growth.
However, both Solanki and Joshi recognize the challenges faced by MSMEs. Solanki explains that without adequate access to working capital, small enterprises will struggle to survive. Meanwhile, Joshi warns that becoming sub-contractors for big companies will stifle their entrepreneurial spirit.
India is committed to reducing its climate-heating emissions and has set a goal of 500GW of clean energy capacity by 2030. To achieve this, the country is focusing on non-fossil-fuel sources of power such as solar, wind, nuclear, hydro, and biomass.
Despite the challenges they face, MSMEs play a vital role in India’s renewable energy sector. They have the potential to drive job creation, enhance domestic production, and contribute to the country’s energy security.
For Solanki and other small enterprises in the solar industry, financial support and better opportunities to bid for projects are crucial for their survival and growth.
“And if we become sub-contractors for big companies, it will kill our entrepreneurial spirit,” Solanki added.
Credit: The Star : News Feed
