Moser Baer India expects its solar power business to generate about two-thirds of its total sales in the next two to three years, its founder and chairman said, as it seeks to tap the country's estimated $70 billion solar power market.

Moser Baer, a leading player in the solar energy space in India along with Tata BP Solar, does not disclose its revenue breakup, but a source said solar business contributes about 20-25 percent to its total sales currently.

The firm has also been in advanced talks with several foreign players for a tie-up and is looking to buy thin-film manufacturing lines with capacity of 80-100 mega watts, Deepak Puri told the Reuters Global Energy and Climate Summit by phone.

"We are contemplating which (thin film production) line we should focus on.... It could be a German line, or it could be a locally built line, or something else," Puri said on Wednesday.

The world's second-biggest maker of optical storage media is seeing a decline in its core business with the rise of the internet and easier availability of data hitting its profits.

"Optical storage is on the declining side. Slowly but surely it is reducing.... In 2-3 years, two-thirds of that (total sales) should come from solar."

Puri also said Moser Baer's solar unit, which is evaluating an initial public offering, may file for an IPO in late 2011 or early next year.

Moser Baer's ambitious expansion plans for solar power suffered a setback last month, when it said it would be unable to implement its $500 million project in Andhra Pradesh state after the cancellation of a memorandum of understanding by the state for failure to adhere to guidelines.


India's solar power regulations do not favor local players like Moser Baer and Tata BP Solar, a joint venture of Tata Power (TTPW.BO) and BP (BP.L), Puri said, as it pushes for increased focus on domestic manufacturing only for government projects.

The regulations, which come into effect next month, will make it mandatory to use 30 percent domestic content for the solar photovoltaic power projects in the first phase of a national solar mission.

India also plans to make it mandatory for solar firms to use 100 percent local solar cells and modules in the second phase.

The plan discourages foreign players like FirstSolar and Suntech, which were hoping to grab a pie of India's lucrative solar market that could be worth about $70 billion by 2022.

Foreign firms are reluctant to set up plants in India, as the absence of a large-scale business may hurt their profitability.

"What is stopping them from setting up big plants in India? If they can have plants in China, why can they not have a big plant in India?" Puri asked.

"Besides, the focus on local manufacturing is only for government projects. They can still sell to all other projects."

India's policies have encouraged many local firms to set up new plants and expand aggressively , while opening the door for them to look at foreign tie-ups for technical expertise.

India is building an initial capacity of 1 GW of solar power by 2013, enough to power close to 1 million homes. It would then add 3-10 GW by 2017, and hopes to grow that to 20 GW by 2022 .

India currently has a peak-hour power deficit of about 14 percent. The renewables sector comprises 6 percent of India's total power mix.

But, lowering the cost of solar power is the main challenge faced by the fast-paced Indian solar sector, Puri said.

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