Context: Reecently, the Ministry of New and Renewable Energy (MNRE) has urged states to set up renewable energy (RE) equipment manufacturing parks to meet domestic demand as well as make India a global production hub.
Key Points

• At a time when numerous international firms are looking to move their production base out of China in the wake of the coronavirus (Covid-19) outbreak.
• The Ministry is seeing a fresh opportunity in setting up renewable energy (RE) equipment manufacturing parks to meet domestic demand as well as make India a global production hub.
• The ministry has also got in touch with trade commissioners and representatives of various countries and invited them to invest in this promising sector in India
• With this objective in view, Ministry has written to various State Governments and various Port Authorities to identify land parcels of 50-500 acres for setting up such Parks.  
• Tuticorin Port Trust, States of Madhya Pradesh and Odisha have already expressed their keen interest in setting up RE Manufacturing Parks. 
• These hubs will manufacture equipments like silicon ingots & wafers, solar cells & modules, wind equipments and ancillary items like back sheet, glass, steel frames, inverters, batteries etc. 
• At present, country has around 10 GW of Wind equipment manufacturing capacity.  
• In case of Solar Cells and Modules India imports about 85 % from abroad.   
• To incentivise domestic manufacturing, Government of India already announced provisions to enable levying of Basic Customs Duty on import of solar cells and modules. 
• It may be stated that in a time when many companies are planning to shift their manufacturing base from China, it is opportune time for India to bring policy changes for facilitating and catalysing manufacturing in India.  
• In tune with this, MNRE has set up RE Industry Facilitation & Promotion Board to facilitate investment in RE the sector.  
• The Ministry has also strengthened the clauses in Power Purchase Agreements(PPAs) to boost investor confidence.  
• The three Power and RE Sector NBFCs namely PFC, REC and IREDA have reduced their repayment charges to 2% for enhancing the fund availability for new projects in the sector.  
• More over, IREDA has brought out a new Scheme for project specific funding to promote RE manufacturing in India. 

About Power Purchase Agreements(PPAs) 

• A power purchase agreement (PPA) is a contract between two parties, one who generates electricity for the purpose (the seller) and one who is looking to purchase electricity (the buyer).
• It is the principal agreement that defines the revenue and credit quality of a generating project and is thus a key instrument of project finance.
• It defines all the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under-delivery, payment terms, and termination.

About REC Limited, formerly Rural Electrification Corporation Limited, is a public Infrastructure Finance Company in India’s power sector. The company is a Public Sector Undertaking and finances and promotes rural electrification projects across India.

About Indian Renewable Energy Development Agency (IREDA)

• IREDA is India’s leading financial institution dedicated to clean energy expansion. 
• Since its founding under MNRE in 1987, IREDA has financed the largest share of renewable energy projects in India.
• It is a Non-Banking Financial Institution under the administrative control of this Ministry for providing term loans for renewable energy and energy efficiency projects.
• It offers a credit enhancement guarantee scheme to support the issuance of bonds by wind and solar energy project developers. 
• By providing unconditional and irrevocable partial credit guarantees, IREDA aims to enhance the credit rating of bonds for renewable energy projects, thereby improving their marketability and liquidity, and attracting lower-cost and longer-term funding for project developers. 
• The amount raised by credit enhanced bonds shall only serve to repay existing debt partially or fully.
• IREDA’s long-term objective is to contribute to the development of a bond market for renewable energy projects in India.