Indian solar ‘ripe’ for UK investment and financial expertise

  • Amarjit Singh head of India Business Group (IBG)

    Amarjit Singh head of India Business Group (IBG) discusses opportunties for foreign investment in Indian solar. Twitter: Amarjit Singh

The rapid development of the solar energy sector in India represents a huge opportunity for UK-based businesses and investors especially in financing, according to the head of an international consultancy specialising in investment opportunities between the UK, EU and India markets.

The buzz around solar in India has made international  headlines over the last 12 months and even though there are swathes of solar tenders ready to be issued in only the next few months, the country is expected to represent a strong solar PV business opportunity for years to come, with targets of up to 12GW per annum by 2017/18.

“India is going through a very rapid and dynamic transformation on all levels and if you look at the demographics and the demand, solar power is really the only proper solution for India”, Amarjit Singh, head of advisory firm India Business Group (IBG), told Solar Power Portal. “It is an area where we will be seeing more positive developments and the creation of even more opportunities for UK PLC, expertise and businesses and to engage in when doing business with India.”

At the ‘British Opportunities in International Solar Markets: India Focus’ event held by the Solar Trade Association (STA) in London last month, Amit Kumar, partner at PricewaterhouseCoopers India, said that most solar auctions in India over the next two years will be for solar parks. Land acquisition and transmission lines are taken care of by the government in these parks, removing the key obstacles to solar development in India and bringing tariffs down to record lows as seen in recent highly competitive solar auctions in various states.

Kumar said: “Those who are backed by foreign funds – they are winning all the bids – which essentially means that they are having access to cheaper finance, [lower debt finance].

“These are long-term funds with a lower rate of interest than [India’s] domestic banks and that is what is bringing down the cost of the plants. Essentially solar is no longer a technical game. It is a pure financial game.”

He added: “We are not sure whether more solar parks can come up. That depends on the interest of participating states and the availability of the land, because for one solar park the minimum requirement is 500MW.”

Kumar said that once all the solar park capacity is filled up, investors in independent solar plants will have to identify the land themselves.

Kumar added: "That is a challenge for foreign investors, which means that [they] need to plan for the next one or two years."

However, referring to the two-year period of solar park tenders, Amarjit Singh said: “That time-scale should be utilised to develop a network of influences and advisors in country, in India, because if you look, there is a very systematic way of doing business that is ingrained in the very cultural fabric of India.

“Businesses have to acutely appreciate that building investing and maintaining personal relationships in India will pay dividends. Although on the face of it there seems to be a lead-in time, actually the prime is to get a head-start in developing that network, which will ultimately help you to succeed.”

Singh said developers should tap into the extensive British ambassadorial network in India, which is one of the top three largest diplomatic services available to UK businesses globally, providing routes to market.

Singh also said that the abundance of current projects provide an opportunity for developers to enhance their knowledge of the Indian solar regime, by detecting issues or barriers and working on providing more innovative solutions.

“I would say that finance is one of the UK's particular strength areas. Prime minister Narendra Modi was in the UK to talk of how creation of Masala bonds on the UK market can help implement infrastructure projects in India. Masala bonds are Indian rupee denominated bonds issued in offshore capital markets.

Furthermore, India’s fifth largest private sector bank Yes Bank also recently announced plans to list a Green Bond of up to US$500 million on The London Stock Exchange by December this year.

Singh said that the “mood music is very upbeat” from a UK India business perspective at present, just four months after Modi’s visit to the UK, which had a reassuring impact on the business community.

Singh added: “India is ordinarily seen as a fairy complex and challenging market, but actually on the ground level at the moment the reform agenda is paving the way for positive change, which UK companies need to tap into whether it is from a solar renewables or a financial perspective.”

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