Indian electronics market was worth $80 billion in 2011
2012 will transform the Indian electronics industry from a purely consumption-led economy to a manufacturing economy.
By Deepa Doraiswamy, industry manager, electronics and security, Frost & Sullivan.
The Indian electronics market, estimated to be worth about US$ 80 billion in 2011, has been growing consistently at 23-25 per cent, year on year, in the recent past. Though comparatively small when viewed against the global electronics market, which is worth US$ 1.8 trillion, a burgeoning domestic market as well as the increasing export opportunities have placed the Indian electronics industry in an enviable position on the global map. 2011 was quite a landmark year for the Indian electronics industry that witnessed mobile handset sales in excess of 180 million units, rapid penetration of flat panel display (FPD) TVs, the uptake of safety and comfort enabling electronics in mid-segment automobiles, and the rollout of 3G services in the country, to name just a few major developments. Figure 1 shows the demand-supply projections for the Indian electronics industry.
2012: A defining year
2012 commenced amidst turbulent global economic conditions. The deepening euro zone debt crisis and apprehensions of a double dip recession in the US, coupled with fluctuating economic conditions in the Middle East, have ensured a marginal decline in projected growth trends for India as well. The Indian electronics industry is, however, well poised to continue its growth ascent bolstered by the strong demands from all end user segments. The anticipated formalisation of the National Policy on Electronics (NPE), 2011 is expected to make 2012 the most crucial year for the country’s electronics industry. NPE aims at bridging the US$ 200 billion gap, which would arise by 2020 between the supply of and demand for electronics in India. The policy envisages the overall development of the electronics systems design and manufacturing (ESDM) ecosystem, thus ensuring unbridled growth in the electronics sector.
With the government taking the lead to promote the growth of the indigenous electronics industry, which has the potential to be a significant contributor to GDP growth and create employment for many, there are certain sunshine sectors that hold the key to the growth of the electronics industry in 2012. Figure 2 depicts these high growth sectors.
LED lighting: According to Frost & Sullivan’s latest research, the Indian LED lighting market was estimated to be US$ 73.32 million in 2010, growing from US$ 52.34 million in 2009. The market is expected to grow at a compound annual growth rate (CAGR) of 47.76 per cent till 2018 and reach revenues of US$ 1.67 billion in 2018. As India grapples with the challenges of energy deficiency, electrification of remote rural regions, and energy sustainability, the need to develop alternate technologies that overcome these challenges has become more urgent. Lighting being an application that accounts for 20 per cent of the entire energy consumption in the country, LEDs have emerged as the solution to India’s lighting energy woes. LEDs are poised to replace conventional general lighting service (GLS) lamps and high intensity discharge (HID) lamps in many key applications like street lighting, indoor and outdoor lighting, apart from industrial, automotive, and niche applications like the railways.
Solar power: An ambitious solar mission aims at 20 GW of solar power generated by 2020 and has attracted companies to enter photovoltaic module production in the country. The natural progression towards more upstream value-addition in the solar industry holds significant potential for companies to focus on.
Medical electronics: About 75 per cent of India’s US$ 3.3 billion medical devices market is currently catered to by imports. A growing population, apart from the increasing propensity of lifestyle related diseases such as cancer and diabetes warrant the need for more healthcare infrastructure and have also created a huge demand for medical equipment. All major device manufacturers are turning towards India to service this enormous demand. From the need for everything from PCBs, to controllers, processors, displays, and medical equipment, all of which are rich in electronics components, the opportunities for indigenous manufacturing are expected to be significant in the ensuing years.
Automotive electronics: India is evolving into a global hub for the automotive industry. Increasing labour, raw material and logistics costs have resulted in numerous automotive OEMs to shift manufacturing to India. Electronics accounts for anything between 20 to 40 per cent of the cost of an automobile and is continually increasing each day as more safety and comfort features get included in automobiles.
The electronics industry is also driven by regulations. These trends make the automotive sector a highly propitious one for local electronics companies.
Set top boxes and TVs: The digitisation drive is expected to propel the demand for set top boxes, whose penetration is currently minimal. Of the 140 million households in India that have a TV, less than 25 million have a set top box enabled DTH connection. Growth trends in both rural and urban India indicate huge prospects in this market. In the TV market, with the phasing out of CRT TVs almost touching its zenith in urban markets (unlike in rural and semi-urban pockets), the penetration of flat panel TVs (LCD and LED) is expected to be on the rise. These consumer markets have significant potential and offer great opportunities.
Looking ahead
In 2012, supply chain fluctuations, the rising dollar and yen, and the turbulent global economic climate are likely to impact the local electronics industry by way of increased prices, lower margins, and higher operating expenses. On the other hand, policy initiatives would provide a major thrust to localisation. Demand and the proliferation of indigenous devices such as the Aakash tablet would be rampant and take the local electronics industry to a whole new level. 2012 will, therefore, be a defining year in transforming the Indian electronics industry from a purely consumption-led economy to a manufacturing economy.
EMS industry will witness 20 per cent growth in 2012
Growth trends that began in 2011 will gain momentum in 2012 with the electronics industry depending more and more on EMS
By Subhash Goyal, managing director, Digital Circuits Pvt Ltd
The year 2011 was a difficult year for the world economy. The slow recovery in the US and the fear of recession in Europe had its impact on India as well. However, the Indian electronics industry could maintain its growth trajectory by virtue of large domestic demand and increasing export potential. Presently, India contributes only 1.5 per cent to the global electronics industry, but this contribution is expected to grow to 15 per cent by 2020. This adds up to a whopping US$ 360 billion. The government’s recent policy initiative will definitely act as the catalyst for the growth of the electronics industry in the country.
EMS industry in 2011
Electronics manufacturing services (EMS) is fast emerging as the backbone of the electronics industry, next only to the components industry. Presently, the penetration of EMS in the Indian electronics industry is around 10 per cent compared to 25-30 per cent, globally. Hence, there is a huge potential for the Indian EMS industry to grow in the near future to reach at least 20-25 per cent of the overall Indian electronics industry, which itself is growing at a CAGR of 20-22 per cent.
The Indian EMS industry has faired very well in 2011, even against severe odds. A safe estimate will put this growth rate in the double digit category. The industry has pumped in fresh investments to enhance capacities and upgrade facilities to face the challenges presented by emerging technologies in electronics.
As the electronics industry is facing more and more competition, there is a need to outsource manufacturing to EMS providers so that big firms can derive the advantage of their core competence, while benefiting from the economies of scale at the EMS side. The growing competence of EMS providers in offering value-added services like complete solutions, including design and box build, is an opportunity for the Indian electronics industry to concentrate on its core competence and bring out new products into the market in a short span of time, without too much investment. All these factors have contributed to the reasonably good performance of the EMS industry in 2011.
Though there was a slump in the global demand for the products of some existing customers, this was well compensated for by the emergence of the new export opportunities. Design houses and R&D centres in India have developed many new products, specially in the field of LED lighting, automobiles, solar products and related applications, which have created a new market in India as well as abroad.
Thrust towards mobile handsets and accessories, apart from innovative devices like locally developed tablets and simple computers, are other products that have fuelled the growth of the EMS industry in the country. However, this growth was moderated by the high cost of the dollar, the high rate of interest and the scarcity of finance in 2011.
Trends in 2012
The growth trends that began in 2011 will gain momentum in 2012 with a higher dependence of the electronics industry on EMS. The introduction of new products like LED based equipment, mobile handsets and their accessories, tablets and simple computers will also mature, adding to the top line of EMS companies.
The interest rates and dollar prices are expected to ease in 2012 and the availability of funds is also likely to increase. The implementation of the National Manufacturing Policy and the National Policy on Electronics will create the desired ecosystem to attract investments in EMS. The measures stipulated in these policies will help the EMS industry to become globally competitive.
The rising cost of manufacturing in China is sure to prompt a shift in the investment decisions of global players and make India an attractive destination for manufacturing. All these factors will contribute positively in furthering the growth of the EMS industry in 2012, which I expect to be more than 20 per cent.
A subdued SMT equipment market may look up in 2012
2012 may see some investments in the lighting, metering, automobile and mobile phone industry, which could translate into some growth in the SMT equipment market as well.
By N Chandramohan, country head (SMT division), Juki India Pvt Ltd
The year 2011 was not as exciting for the Indian SMT industry, as was expected. The volatility in the financial markets, the European crisis, the still recovering economy of the US, the weakening rupee, high domestic interest rates, and the strengthening Japanese Yen added to the woes of the domestic electronics manufacturing sector. In turn, these economic problems had a profound impact on the SMT equipment market as well.
No large projects went on stream last year—the only saving grace were the lighting and metering industries, which grew steadily. The industry most affected was consumer electronics, which normally sustains and drives the growth of electronics manufacturing. The growth in the automotive sector was also affected due to rising fuel prices and the high cost of borrowing.
As the fate of the SMT equipment market is closely intertwined with the electronics manufacturing industry, it directly influenced the sale of SMT equipment, narrowing down its growth rate. In 2011, the SMT equipment market in India grew by 20 per cent. This growth was mainly driven by sectors like telecom, lighting and consumer electronics.
Flexibility, therefore, became the key mantra for survival, with SMT players now supplying flexible machines that enabled electronics assemblers to reduce their manufacturing costs through the optimum use of installed capacity. SMT equipment players also resorted to providing value-added services, and introducing innovative products to meet the changing needs of electronics manufacturers.
Players hopeful about 2012
The forecast for 2012 does not augur too well at this point of time. With regard to the Budget, one expects another year of populist measures. However, if the draft National Manufacturing Policy is implemented, there may be the hope of some large projects coming up in 2012. Though 2011 was an average year, one hopes that 2012 will see some investments coming through in lighting, metering, the automobile industry, and hopefully, in mobile manufacturing as well. This, in turn, may bring some growth to the SMT equipment market. We are hopeful of seeing a conservative growth of 30-35 per cent in 2012.
The mobile phone, set top box and LCD TV segments are still largely dependent on imports from China and these are the volume drivers for the SMT industry. These industries must be given incentives and a level playing field to enable substantial growth.
Today, in the global electronics manufacturing market, which is worth US$ 1.5 trillion, India contributes only 0.7 per cent. Even a 20-30 per cent growth, year on year, is not substantial when viewed from the global perspective. However, explosive growth is possible if the government is keen to support and prop up this industry with fiscal incentives, favourable labour policies, setting up of hardware parks and development of a proper ecosystem for manufacturing. At the moment, the government is blind to the opportunities that electronics manufacturing could create in terms of generating employment, curbing expensive imports, and managing the balance of payments issues, especially with China.
There certainly is a great demand for electronics in India, and hence, we are hopeful about manufacturing getting a boost this year due to the recent government initiatives. That is one bright spot for the SMT industry at present.
The steady growth of the SMT equipment market will be bolstered by the demand from various end user sectors such as communications, consumer durables, industrial production, automotive, medical and defence/strategic electronics—areas in which the use of electronics is on the rise. The mobile revolution is also necessitating the indigenous manufacture of various telecom products such as handsets, base stations, modems and VoIP phones, thus creating demand for SMT equipment. The automotive industry, too, is replacing its legacy equipment with SMT equipment to improve efficiency in the production process.
Indian components industry to be on upswing in 2012
Components industry is expected to touch nearly US$ 10 billion this year, which will be driven by sectors like IT/OA, consumer electronics, mobile devices, telecom, industrial electronics, etc.
M Nanda, head, business development, RS Components and Controls (I) Ltd
According to a report brought out by the India Semiconductor Association (ISA) in association with Frost and Sullivan, the components industry in India was estimated to be about US$ 8 billion in 2011, of which 60 per cent was made up of imports. Next to oil, electronics is the single largest domain in which imports are growing by double digits every year.
In the absence of any significant manufacturing of electronics components in India, electronics component distributors are doing good business, and here, year on year, growth is expected to be 25-30 per cent.
Due to highly skilled talent available at relatively low costs, India has always been looked to by global companies for software and related services. However, the trend is now changing. Due to the government’s increased focus on developing indigenous manufacturing and on building an ecosystem to support the electronics industry, global companies have started looking at India for electronics manufacturing as well. This, in turn, will surely drive foreign direct investment and business opportunities in the electronics industry.
The first half of 2011 started on a very promising note. Electronics customers had orders to fulfill, and suppliers estimated a robust demand seeing the early trend. Components markets all over Asia were booming. India was no different and had a healthy growth in components imports. Sales teams of all key suppliers were busy, in taking orders from clients–both current and prospective. Then came the European crisis, Japan’s tsunami and the Thai floods. Fortunately, contrary to expectations, the Indian components industry was not badly affected. Although the European crisis brought about a slowdown in EMS exports, while the Japanese tsunami and the Thai floods saw delays in component supplies, many Indian manufacturers, component importers and sourcing companies still managed to do well.
The market was also hit by the adverse foreign currency conversion ratio. Additionally, the cost of finance also went up. Everything, from the cost of supplies and parts to the cost of freight, went up. This resulted in burgeoning costs and the depletion of margins. Eventually, this cost was passed on to the consumers (for products sold in India; though EMS exports to Europe are still facing challenges). However, the industry stabilised to a certain extent and what could have been a major crisis was thwarted.
According to estimates, the electronic components industry will touch nearly US$ 10 billion this year. This will primarily be due to growth in sectors like IT/OA (30 per cent); consumer electronics, including mobile devices (39 per cent); telecom (19 per cent); industrial electronics (4 per cent); automotive (3 per cent); and others including medical, defence, etc (5 per cent).
Despite the global crisis, we estimate that the Indian components industry will be on an upswing in 2012 because of the gap in the demand-supply equation that persists in the country, though both the buyers and suppliers should be a bit cautious. The future appears encouraging despite difficult global market conditions, and we continue to see an increase in the demand of high-mix low-volume needs. RS Components is at the forefront of the high service level distribution model and we aim to grow substantially given the current opportunities. We look forward to a stronger industry ecosystem where the demand for components could be met with a supply within the country, thus insulating us from external destabilising factors.
T&M equipment market expected to achieve CAGR of 30%
This growth will be driven by higher growth in end user segments such as communications test equipment and laboratory analytical instruments markets
By Prashant Das, head-marketing & sales, The Motwane Manufacturing Co Pvt Ltd
India has emerged as a major market for test and measurement (T&M) equipment. The growing demand for electronic products has led to an increase in the number of manufacturers in the T&M space. A market survey on the Indian T&M industry shows that domestic demand has witnessed a tremendous growth over the past 18 months. The Indian T&M market has been driven by both global and domestic demand. India’s low labour costs combined with its good software skills are attracting foreign companies, thereby expanding the Indian T&M market.
The Indian T&M industry has registered 42 per cent and 38 per cent growth, respectively, during the last two fiscal years. It is expected to achieve a compounded annual growth rate (CAGR) of 30 per cent over the next five years. This growth will be achieved due to a higher growth in end user segments such as the communications test equipment and laboratory analytical instruments markets. The general purpose test equipment market is also expected to grow.
Potential of T&M industry
The Indian T&M market has been growing steadily compared to Western markets, where growth rates have hit a plateau.
The size of the Indian T&M instruments market is estimated to be Rs 1 billion in the near future. This is largely due to the formidable growth registered by the key industry segments like power, automobiles, electronics, pharmaceuticals, medical sciences and telecommunications hardware. Defence and other government sectors have also been instrumental in driving the growth of this sector. Increasing R&D activities across various industries, institutes and organisations are expected to further augment the growth of the Indian T&M market.
Today, India is a favourable destination for global investments, where huge industrial growth is expected. The presence of top MNCs has created healthy competition among all the existing players. This has led to the introduction of new technology, apart from challenging domestic players to reduce their product development time. By virtue of this, domestic players are not only able to produce world class products but also reduce their cost of manufacturing to almost half that of their foreign counterparts.
Domestic players are optimising resources and using the best manufacturing practices to enhance their quality to reach global standards, which allows them to look beyond the domestic market and pitch their products in the world market.
Growth of LED lighting market will come from streetlight applications and railway sector
The overall size of the Indian LED lighting market is currently estimated to be over US$ 1 billion. Despite the encouraging growth, this market has its share of challenges
By Hari Kiran Chereddi, managing director, Sujana Energy Ltd
The growth rate for LED lamp shipments from 2009 to 2015 is forecast to be 97 per cent (CAGR), while the growth rate from 2015 to 2020 will only be 13 per cent (CAGR). The growth curve that we saw in the LED market has been steeper in 2011 and we expect this trend to continue in the near future.
Despite this encouraging growth, the LED lighting market in India has its share of challenges. LED lighting installations require more designs, spanning the optics, thermal, and electronics domains. LED lamps continue to remain slightly more expensive compared to conventional lamps, given that the current scale of indigenous manufacturing has not reached optimal economies of scale. Another challenge has been the absence of uniform standards for different applications, which is restraining quicker adoption and is resulting in cheaper imports flooding the market.
What does 2012 have in store?
The Bureau of Energy Efficiency (BEE) recently launched a nationwide LED village lighting campaign, and since its launch the programme has implemented 34 LED based streetlight projects in 23 states for which approximately Rs 90 million has been spent.
According to Frost & Sullivan research, the LED lighting market in India stood at US$ 73.3 million in 2010 and will continue growing at a CAGR of 45.53 per cent till 2015. This growth is attributed to short term drivers coming from streetlight applications and the railway sector. Over 60 per cent of the total demand in 2012 will be from these two applications.
The overall size of the Indian LED lighting market is currently estimated to be over US$ 1 billion, but it is highly fragmented. We at Sujana Energy are looking at garnering around Rs 5 billion in the next three years by deploying a combination of LED and solar applications. We see a bright future ahead for the LED luminaires industry and its affiliated industries, as public acceptance of the technology increases hand in hand with the decrease in prices of LED luminaires.
What needs to be done
One of the major requirements for the LED market in India is to make standardised and high quality products available to meet the demand. Anti-dumping regulations will be welcome to improve local manufacturing and reduce the presence of cheaper imports from across the world. Government bodies like BEE and ISI are actively working towards LED lighting product standardisation, which, in turn, will help market consolidation. LEDs account for over 40 per cent of the cost of fixtures/luminaires. Setting up domestic manufacturing units will help in reducing costs by over 20 per cent.
Time is ripe for India to rule the world battery markets
Solar, telecom, automation and power conditioning will drive demand in domestic market
By Sunil Bhatnagar, director, marketing, Artheon Electronics Ltd
The battery industry in India, comprising automobile, sealed maintenance free (SMF), tubular and lead acid batteries, is getting bigger, year on year. It has been growing at an annual rate of 25 per cent for the past four years, and is expected to keep growing by 25 per cent till 2015. While China will remain the world’s largest national market by far, India will register the strongest growth in sales by 2015.
In 2011, SMF VRLA batteries did quite well due to the high demand, but flooded lead acid batteries could not catch up much as the power condition in most of the states was good last year. So with fewer power cuts, a slower movement of inverter batteries was seen.
Although 2011 was a good year for the battery industry, 2012 could be even better. Thanks to the Chinese battery industry debacle caused by environmental concerns, India is now looked upon as the main battery producer in Asia. Demand for Indian batteries from importers worldwide has increased by many times. At the same time, Indian manufacturers are also gearing up for high demand from the domestic market due to the growth in sectors that use batteries. The main sectors where demand would grow in 2012 are solar, telecom, automation and power conditioning.
Higher demand forecast
Solar power generation is the fastest growing industry worldwide with so many green energy solution projects and programmes running in India and abroad. India is witnessing a great change in the demand for solar energy and many new projects are coming up for rural electrification, home lighting, streetlights and solar lanterns, and all these programmes are dependent on batteries. The telecom market is also picking up with many new cellphone towers coming up in India. This will lead to a jump in demand for batteries in 2012.
At the end of 2011, there was some shortage of small batteries for solar lanterns, CFLs, home UPS systems, etc, which indicates that 2012 will be overbooked for most companies in the small battery segment. At the same time, a good demand is forecast for gel batteries for solar applications, though AGM VRLA batteries make up the major portion of this market. Demand for tubular batteries is also growing as innumerable government programmes require a five year warranty on batteries, and this warranty can be offered only with tubular batteries.
Demand for batteries will also shoot up as Central and state governments are coming up with new circulars, which mandate that 10 per cent of the power used by telecom tower companies must be generated through renewable energy sources. This holds true for even for hospitals, hotels, etc. This would lead to a major spike in battery demand, as all this generated power would have to be stored in batteries.
With all these developments, the battery market will grow at a good rate in 2012. Prices of batteries will go up due to the strengthening dollar and also due to high export demand. Hence, battery companies will witness a heavy rise in revenues in 2012. In fact, India should take this opportunity to make its name in the battery markets the world over as this is the right time to enter the export market.
CCTV Camera manufacturers can look forward to a bright future
In 2012, the market will continue to grow at a rate of over 30 per cent, driven by factors like increasing domestic security concerns, need for more protection against terrorism, and emergence of new improved technologies like IP based CCTV cameras
By Sanjeev Sehgal, managing director, Samriddhi Automations Pvt Ltd (Sparsh)
Following the 2008 attacks in Mumbai, all sections of society, including the government, businesses and individuals are investing significantly in installing and upgrading their security infrastructure. As a result, the demand for security products is growing faster than the 20-30 per cent growth rate experienced recently.
Although the Indian electronics security industry, which is largely imports based, still has a long way to go to match the standards of the developed world, it is expanding fast and its current value is estimated to be over Rs 20 billion, with CCTV equipment accounting for over one-third of the market. This segment has been growing at a much faster rate than other segments such as access control, intrusion alarms or fire detection alarms.
Imports play a major role in the market, but many initiatives are being taken to promote indigenous manufacturing. It is believed that optimum security cannot be achieved with standard solutions. For the best security, customisation is needed, which is why manufacturing plays a major role, enabling companies like Sparsh to provide customised products and solutions. Importers can only provide a few models of cameras, which might prove inadequate in meeting the exact requirements of customers. Alternatively, Indian manufacturers can provide a customised solution to exactly match their customers’ requirements. With CCTV cameras getting more intelligent yet possessing limited retention capabilities, the market offers huge opportunities for software development in CCTV cameras. This has attracted major IT giants towards this segment.
Forecast for 2012
Currently, the market is driven primarily by demand from the government and the public sector, followed by the industrial and commercial sector. However, we believe that in the coming years, the residential market will outpace other security sectors. We expect the market to continue to grow at over 30 per cent in 2012. The key drivers for this growth would include the increasing concerns about domestic security, the need for more protection against terrorism, and the emergence of new improved surveillance system technologies like IP based CCTV cameras.
The analogue technology currently dominates the CCTV camera market, but the demand for IP technology is increasing primarily in the government sector. We expect IP technology adoption to grow significantly as the Internet infrastructure improves throughout the country. There has been a growth in the CCTV camera market due to the adoption of this technology in new sectors such as retail, transportation and healthcare.
Few recommendations
The appreciation of the dollar against the rupee has impacted the growth for this import dependent market. India is a price sensitive market and to increase their market share, most companies have added low end products to their portfolio. The market is also being flooded with low end cheap products from China, by the unorganised sector. This may be contributing to the market’s growth but could hurt it in the long term when these products do not deliver the desired results. Customer education is key to ensure that these low end, low quality products do not impact the market’s growth. The government and various industry associations should work on the standardisation of electronics security equipment.
The industry is hopeful that the new manufacturing policy will boost local manufacturing, and this will reduce the outflow of foreign currency as well as add to employment generation. Local manufacturers should be given preference in government supplies if they can provide the same quality as imported products at reasonable prices. However, despite these drawbacks, it seems a bright future for local manufacturers as customisation is the need of the hour.
Grid and off-grid PV market will witness significant progress in 2012
The market will be more stable on the pricing front and more players are likely to enter balance of system and off grid segment
By Raghunandan SS, vice president, engineering, Kotak Urja Pvt Ltd
Generating 30 terawatts of clean, green renewable energy by 2022 is the ambitious goal of the Jawaharlal Nehru National Solar Mission (JNNSM). The first phase of this mission is just half way through. From generating merely a few MW of solar energy as of 2009, the JNNSM has kickstarted the MW size power plant movement in India. The year 2011 witnessed positive developments both in government segment and the industry. With the manufacturing capacity of crystalline PV modules and solar cells crossing 1 GW and 500 MW, respectively, the number of manufacturers has also increased.
There has been aggressive participation from among the solar power plant developers, who rushed to ensure they were eligible to participate in the first phase of the JNNSM. Infact, over-subscription lead to reverse bidding, which in turn, witnessed the slashing down of the electricity tariff. A few projects did not even take off as the financial post reverse bidding did not interest financial investors. Even though the lower tariff rates created a slowdown, the competition between crystalline PV cells and thin film came in handy. Thin film prices went below US$ 1 per Wp. This pushed the crystalline PV prices down. In 2011, crystalline module prices dropped by nearly US$ 1 per Wp. The Gujarat Government’s Solar Mission, which is independent of the JNNSM, itself bundled 968.5 MW of solar projects. In spite of the slowdown due to lower tariffs, the drop in module prices gave the industry a breather. The sources for BOS components, viz. inverters, mounting structures and accessories, were established. The entry of big names like Reliance, Adani, Moser Baer, Lanco, etc, as project developers, brought about some momentum. The industry also witnessed big names like L&T, Punj Lloyd, Shapoorji Pallonji, etc foray into engineering procurement and construction (EPC) , strengthening the industry. As per the Ministry of New and Renewable Energy (MNRE)—by the end of November 2011, 143.5 MW of solar power plants were commissioned and operational under the JNNSM. Apart from this, under the Gujarat government’s solar programme, solar power plants generating 91.4 MW of electricity were operational by the end of November 2011. With more than 250 MW of solar farms in the pipeline for 2012, the industry had seen a significant improvement in the grid sector. The off-grid sector witnessed aggressive market penetration. The MNRE has approved the projects of various state nodal agencies adding up to 20.6 MW, making them eligible for central financial assistance to the tune of Rs 2 billion.
Forecast for 2012
The centralised grid and de-centralised off-grid is expected to see more government initiatives in 2012. The MNRE has set up the Solar Energy Corporation of India to assist in and function as the implementing and development arm of the JNNSM. With the government mandating the use of Indian made cells and modules, the country’s manufacturing capacity is likely to expand. This would also increase backward integration such as the production of wafers and polysilicon. Even though the drop in module prices over the previous year led to many companies reconsidering investing in polysilicon production, secure arrangements for the domestic industry through government initiatives would help revive investment plans.
The grid and off-grid PV domain is expected to witness significant progress in 2012 through a mix of technology development and market acceptance. Crystalline PV is likely to see an increased deployment in the grid-tied power plant segment. Even though the majority of solar farms used thin film in 2011, the statistics relating to energy yields demonstrate crystalline PV’s dominance over other technologies.
The need for mechanical trackers to increase the energy yield for the same module area, as well as R&D on maximum power harvesting possibilities, storage batteries and monitoring solutions are a few areas that the industry is expected to evolve in, in 2012.
While nearly 500 MW of power plants are in the pipeline for deployment in 2012, the off-grid segment will require continued assistance from the government. The prices of PV modules would also depend on the demand scenario in Europe. The market is likely to be more stable on the pricing front and more players are likely to enter balance of system and off grid segment.
