In its journey towards energy transition and achieving 500 GW of installed renewable energy capacity by 2030, India is also looking at becoming a manufacturing hub of solar modules and cater to both domestic and global demand. Although the government has come up with incentive schemes and domestic developers have grown up the reliance on China for upstream components continues. Here is a look at how India aims to become a solar PV manufacturing hub.
Q. How has India fared so far in its goal of setting domestic solar module manufacturing industry?
A. As of March 2023, India has set up a module manufacturing nameplate capacity of 38 GW, against 18 GW a year ago, according to a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research. It said that in value terms Indian PV exports increased five-fold in FY23, compared to the previous fiscal.
However, there has not been a major growth in the production of cells, wafers and polysilicon which are used in the manufacturing of modules photovoltaic modules.
While India has a nameplate capacity of 6 GW for cell production, there is no notable capacity for polysilicon and wafers.
Q. What are the key concerns for the Indian module manufacturing sector?
A. Despite healthy demand both in the domestic and export markets, there are headwinds being faced by the industry, including the continued import dependence for cells, polysilicon and wafers among others. The IEEFA report said that although the quality of all tier-1 Indian manufacturers is comparable to global standards, domestic solar power developers are largely hesitant towards Indian supplies. Further, the lack of skilled manpower to install and operate high-tech machinery, especially for cells and other upstream components, is also a challenge, it added.
Q. What are the efforts taken by the government to boost manufacturing in the solar power ecosystem?
A. The Union Ministry of New and renewable energy has rolled out a production-linked incentive scheme where in it has allocated funds in two tranches due to robust demand for incentives under the scheme. In March, the government allocated a total capacity of 39,600 MW of domestic solar PV module manufacturing capacity to 11 companies, with a total outlay of ₹14,007 crores under the second tranche of the PLI scheme for high-efficiency solar PV modules. The second tranche covers the whole ecosystem of polysilicon to modules.
Further, in order to boost demand for domestic cells and modules and thwart cheaper imports from China, the government has imposed a basic customs duty of 40% on modules and 25% on cells with effect from April 2022.
Q. What is the outlook for the domestic module industry?
A. The two tranches of the PLI scheme will add 51.6 GW of module capacity and at least 27.4 GW of integrated ‘polysilicon-to-module’ capacity in India in the next three to four years, said the IEEFA report. It further said that India will become self-sufficient by FY26 as it would add around 110 GW of photovoltaic (PV) module manufacturing. However, in the short term, the supply constraints may continue to hinder solar power projects.
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