Monday, November 03, 2014: The Indian government has announced more and more funds for the clean energy sector but a subsidy has been put to end in the Rs 10,000 million solar water heater manufacturing industry. Due to this discontinuation of the subsidy, several companies in this sector have been closed due to looming burden of debt. The latest being, Supreme Solar, which is a Karnataka-based company and run by some young entrepreneurs.
Supreme Solar used to manufacture around 40,000 units of solar water heaters every year but the company will discontinue its production. In a conversation with The Economics Times, M Ganesh Pai, director of Supreme Solar, said that solar water heaters were becoming more famous than conventional power sources but now the trend has changed. Sales of solar water heaters are down by 20 per cent and sales have been hugely affected after discontinuation of subsidy. Ministry of New and Renewable Energy or MNRE decided to discontinue subsidy on solar water heater manufacturing, implemented from 1 October.
Due to the imposed subsidy, solar water heaters became more affordable, ranging between Rs 15,000-20,000. The subsidy was applicable for manufacturers which directly affected consumers too. The decision of discontinuation was taken as the subsidy amount was increasing and the ministry was unable to pay manufacturers on time, as told by a senior official from MNRE. But solar water heaters are no more attractive enough after the discontinuation of subsidy. MNRE-approved manufacturer Velnet Non-Conventional Energy Systems Pvt Ltd has also complained that a huge amount of subsidy is pending to be disbursed on the government’s part. Bridge To India, a strategic consulting and market intelligence group explained, market growth was driven by subsidies as the market was doing good when subsidies were provided within time by the government.
