India's largest group of privately owned businesses, Reliance Industries Limited, has announced that it will invest in solar energy, clean coal and nuclear power plants.
Reliance Industries Ltd. chairman and managing director Mr. Mukesh Ambani announced the company's future plans at its Annual General Meeting held at Mumbai. The announcement came days after he signed an agreement with his younger brother, Anil, to reduce any friction between their respective companies and increase cooperation in their future endeavors. The erstwhile Reliance Industries was split into two groups in 2005, each held by the two brothers.
Reliance Industries (RIL) already has a presence in the solar energy sector and has been implementing several major projects across the country. In April, Reliance Industries' Solar Energy Group completed a 1 MW solar rooftop energy system at the Thyagaraj Commonwealth Stadium in New Delhi making it the largest solar rooftop in India. The company is also working on a 5 MW solar farm in the western part of India, when fully operational it will be the largest solar farm in India.
The company currently acquires solar panels from other companies for setting up power plants but with a cash surplus ranging anywhere between two and five billion dollars, the company could even venture into the manufacturing business. Given that the solar energy sector is in its nascent stage in India, an early entry into the sector would open up tremendous opportunities for a company like Reliance.
Boost for the sector
Mr. Mukesh Ambani, and the RIL group, is famous for delivering low-cost products. The company launched the Reliance Communications in 2004 offering extremely low call rates and build the foundation of the telecom pricing war which continues to impact the profit margins of every telecom company in the Indian market. The advantage in entering the solar energy sector is that the government is favorable of expanding the infrastructure, which was not the case when Mr. Ambani's father founded the company four decades ago.
To achieve the goal of increasing solar power generation to 20,000 MW by 2022, the government is offering subsidies on import of machinery used on solar panel manufacturing. The government is also offering preferential tariff scheme and tax benefits to solar power plants ensuring that the investors get handsome returns in the shortest time possible.
Such investment opportunities and the rising demand for power in India could serve as a strong inspiration for the Reliance Industries to launch something unique and perfectly suitable for mass consumption. Additionally, the entry of such a major player in the sector would not only increase confidence among the investors, who stay away due to long payback periods and high initial costs, but also increase competition and ensure the best quality product reaches the consumer.
Image: Amaresh S K at Flickr/Creative Commons
The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.
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