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MORABANDAR, India — The Elephanta Caves, a UNESCO World Heritage Site off the coast of India's financial capital Mumbai, draw hundreds of thousands of tourists every year.

But when the last of the wooden ferry boats leaves at nightfall for the mainland 14 kilometres (8.5 miles) away, the villagers who live permanently on the island are plunged into darkness.

A new scheme, launched this week by an Australian firm, aims to change that, providing three villages with round-the-clock electricity for the first time by harnessing power from the country's most abundant energy source -- sunshine.

The initiative by the Sydney-based Solar-Gem to run LED lamps from panels that soak up the sun's rays and store them as electricity in battery units comes as domestic and foreign firms look to India as a growth market for renewable energy.

Prime Minister Manmohan Singh has said he wants the country to become a world leader in the sector, not just to cut a crippling energy deficit that could hinder development but for security of supply and to tackle climate change.

Government figures from the end of November showed that highly-polluting coal accounted for nearly 55 percent of India's total energy production.

Renewable energy, most of it from wind power, provides 10 percent. Solar energy use is negligible.

Now India's National Solar Mission aims to source 20,000 megawatts of electricity from solar power by 2022 -- about 4,000 megawatts more than the current capacity provided by all forms of renewable energy.

The head of Solar-Gem, Khimji Vaghjiani, said solar power had "enormous scope" in India, as 80,000 villages have no electricity and plans for conventional power plants are often delayed over land or environmental concerns about pollution.

"Trying to distribute power is going to be very difficult (in India)," he told AFP before the launch on Monday evening.

"What do we do in the meantime where villagers are using kerosene and candles? We can put them (solar panels) into every household, moving them away from harmful kerosene and costly diesel."

Indian companies likely to benefit from the focus on solar energy include Tata BP Solar -- a tie-up between Tata Power and BP Solar, a subsidiary of the British oil giant -- and Reliance Solar, part of the country's largest private sector firm, Reliance Industries.

Foreign players are also sensing opportunities, as the price of solar power technology falls and overseas governments look to support India as it tries to switch from a reliance on fossil fuels to "clean" energy sources.

Solar-Gem, whose initiative is a jointly funded Australian-Indian project, said India could become a manufacturing hub for its technology while France's Solairedirect last week announced plans to set up in the country.

Leading overseas solar technology firms, particularly in the United States, however, are said to be concerned about Indian restrictions on imports and believe they could hinder attempts to boost solar power production.

Manish Ram, from the energy and climate unit at environmental group Greenpeace, said the country's solar energy target was "very feasible" and there was no reason why India, with its warm, sunny climate, could not generate more.

Investment in "off-grid" energy schemes such as that on Elephanta Island could be the way forward for hard-to-reach rural areas, he said, as "the centralised system has failed to deliver" with power cuts widespread where supplies exist.

"Decentralised energy is definitely an option. But it should be done in the right way," he said.

Local people could sell back surplus energy to the grid, he added, while the government should provide subsidies, as it does to the coal industry and as China has done, to offset the higher costs of solar units.