Recent India Updates

2016-06-08 / Regulatory & Industry Trends

E-commerce and solar reflect parallel growth stories

The e-commerce trajectory

Until few years ago, the online marketplace was an unchartered territory for Indian consumers. When the journey began, the e-commerce sector was restrained by low internet penetration levels, lack of awareness and lack of development and confidence in the payment systems.

Today, that no longer holds true. Increasing internet and mobile penetration, growing acceptability of online payments and favorable demographics have provided the e-commerce sector in India a unique opportunity to fundamentally alter the way companies connect with their customers. Fuelled by the smartphone boom and expanding data connectivity, India is among the top Internet markets globally in terms of users. A study by Google points out that out of 350 million internet users in India, 152 million access internet through their handheld devices. India will be home to 500 million internet users by 2017, with 80% being mobile users. The battle for India’s e-commerce market therefore, goes way beyond retailing.

Solar on the same path

Let us now look at the growth of the solar market in India. Industry experts are drawing parallels between the rise of e-commerce and solar market in India, across the business lifecycle. In a way, they reflect similar attributes. When e-commerce entered the arena about 15 years ago, the sector was perceived as a bubble that would soon burst and investors were hesitant to invest in it. Consumer, too, feared buying from online retailers. In 2010, funds started pouring and that is when the industry gained momentum and over a period of time started scaling up. The growth was supported by consistent investments as well as reforms. Today, the sector is attracting more attention from indigenous participants. The battle is fierce with firms competing for higher gross merchandise value (GMV). With the government allowing 100% FDI in the marketplace model, international giants like Amazon have had the confidence to invest in India and we now see a definite and a capable ecosystem falling into place.

Similarly, the solar sector has practically taken of from scratch about a decade ago and is today driven by the decline in the cost of technology and a wider acceptance to tap the free resource before the fossil fuels are exhausted. From 2007 to 2009, the industry failed to attract significant investments. From 2010, there was a change and capital started to flow in. According to Bloomberg New Energy Finance study, in 2015 investments in solar reached $5.6 billion — the highest ever – primarily driven by large scale projects. The falling solar tariff, (lowest being 4.34 per unit) is a resultant effect of drop in capital costs. The price of solar modules have gone down by 15 – 20 % in the last year.  The increased spends by private players globally in R&D at the cell and panel level, is partly the reason of driving the tariff below INR 5. India too witnessed a growth of 9% and 7% in corporate and government R&D investments respectively from 2014 to 2015.

As the industry matures, we expect technology to drive the market, ensuring project profitability and to thrive and prosper in a favorable milieu. The initial target of 22 GW of installed solar power capacity is now revised to 100 GW by 2022 and we can envisage solar to drive the energy security issue at granular levels. This is probably the best time for the industry to focus on developing and nurturing this sector by creating a favorable environment for all the stakeholders.

The way we see it now, the solar market is treading the same path as the ecommerce sector when it took off. It is highly likely that, similar to the online model, solar will transpire to be an indispensable part of the daily life of the masses. Will it be able to sustain and scale new heights? Time will tell.

Contributed by Sunil Jain, CEO & ED, Hero Future Energies



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