Building Competitive Green Industries

Indian clean technology firms are avid innovators.Over the past two years, about 70 percent ofsurveyed firms introduced new or significantlyimproved clean technology products or services,methods of manufacturing their clean technologyproducts, and process-based activities to enhanceclean technology product delivery (see Figure 4.7).Such innovation across such a broad spectrum ofindicators suggests that firms are responding tothe dynamic market conditions that are present inIndia.As with any market, there are barriers to the rapidscale-up and deployment of solar technologies inIndia. The top two barriers identified by the cleantechnology firms surveyed in India for this reportare shown in Figure 4.8.The most commonly cited barrier by far wasaccess to finance, which is particularly problematicconsidering that 84 percent of surveyed firms planto raise funding in the next two years. This barrierwas particularly acute for the surveyed cleantechnology firms compared to average Indian firms,who considered access to finance to be the fifthbiggest obstacle to their business. To overcomethis barrier, efforts could be made to educatefinance providers about the real risks posed byinvestments in solar, including the strength ofcontractual guarantees on product performanceand the longevity and robustness of the feed-intariff. Likewise, developers could benefit fromsupport in writing detailed and realistic businesscases that meet the standards of lenders.Access to land, corruption, and customs and traderegulations were also significant barriers forclean technology firms. A lot of clean technologiesrequire access to land, especially large-scale solar,which may underlie this concern, but a focus onrooftop solar PV (which does not require additionalland) or smaller, more customized PV applicationscould mitigate this issue. When asked what thegovernment could do to help overcome thesebarriers and foster growth in clean technology,surveyed firms indicated a range of potential areaswhere help would be welcomed, as shown in Figure4.9. These results show that there is a wide rangeof different government interventions that would bewelcomed by clean technology firms.Figure 4.7. Innovation activities undertaken byclean technology SMEs in IndiaFigure 4.8. Most common barriers faced by cleantechnology SMEs in India80%70%60%80%74%70%68% 68%54% 52%50%40%46%Percent of firms50%40%30%Percent of firms30%20%26% 24%22%18%14%20%10%12%10%10%0%R&DBusiness developmentand salesTraining existing staffMarket analysisRaising fundingDemonstrating newproducts or servicesHiring additionalskilled staffSource: Survey of clean technology firms in India undertaken in Julyand August 2013.0%Access to financeAccess to landCorruptionCustoms and trade regulationsPolitical instabilityBusiness licensing and permitsPractices of competitorsin the informal sectorInadequately educated workforceSource: Survey of clean technology firms in India undertaken in Julyand August 2013.46 Building Competitive Green Industries: The Climate and Clean Technology Opportunity for Developing Countries