I have been thinking about this since 2010 but then brushed the thoughts away because everyone was so confident about the solar potential.
Then the thought resurfaced again with the telecom 2G scam and the subsequent consequences of cancellation of licences.
Lets face it; as an investor; I am more scared about government’s interference with changes in policy; than business models. One can tweak the business models around but it becomes a pain to rework strategy after government goes back on policies or suddenly the environment becomes such (not in the normal business sense) that the promising policy needs to be toned down.
We have seen the recent 2G scam where after years, the companies; that won the spectrum bandwidth to start with telecommunication services in India; now face the music from the government and also the court.
Similar in problems in India’s biggest power plans of UMPP; which has not really picked up after years of negotiations between various stakeholders. Coal mining / sourcing has run into environmental & economical trouble when this was supposed to be given on a platter to the power developers.
What has been common here is the fact that the government comes out with a good business potential policy. And companies have jumped in with investment. But as they say “Not everything that shines is Gold”.
Companies in both sectors, the telecom and the conventional power, are facing new unexpected situations with the 2G and UMPP problems.
Recently the government removed the subsidies on electrical vehicles; coming out with a new updated policy. REVA, India’s first commercial electric car is expected to bore the brunt with decrease in sales.
This does not necessarily mean that the solar sector will also have to go through the same cycle. But not all is well with the sector.
Indian Solar Manufacturing started with the promise of mandatory use of Indian made panels and cells in Indian projects. Now State projects allow usage of imported cells and panels. In addition, Central policy still allows imported thin film modules to be used. This has already put the Indian manufacturers in a bad position. (The Government is not the only stakeholder to be blamed).
Meanwhile, the Indian solar sector seems to be finally moving ahead with installations on the ground. Companies are learning every day and looking at new market avenues & innovative business models.