India’s Ascent in Solar Manufacturing: A Promising Pursuit Amid Challenges

The world of solar manufacturing is captivating, with each stage contributing to the creation of solar modules that light up our homes. China currently dominates this supply chain with an 80% market share across stages. However, India is not far behind and aims to carve a niche as a mega solar module maker. Progress has been encouraging, with a doubling of manufacturing capacity in FY23 and a remarkable 364% increase in solar cell and module exports compared to the previous fiscal year.

The journey to secure a significant position in the global solar manufacturing landscape hasn’t been without its hurdles. China’s use of alleged forced labor in its renewable energy supply chains has raised international concerns, leading to repercussions such as import duties and bans on Chinese solar modules. This unforeseen turn of events has presented India with an unexpected opportunity to accelerate its solar game.

Government initiatives have also played a crucial role in bolstering domestic solar manufacturing. The Production Linked Incentive (PLI) scheme, launched in 2021, incentivized companies to cover the entire production cycle, from polysilicon cells to modules and panels. The Approved List of Models and Manufacturers (ALMM) further discouraged imports by creating an official list of registered manufacturers for participation in government solar projects.

Despite these efforts, certain challenges remain. To become a solar module manufacturing powerhouse, India needs to control every aspect of the supply chain, which can be a daunting task. The cost of producing base material polysilicon domestically is significantly higher, necessitating reliance on imports. Moreover, the high import tariffs and duties can impact pricing power and financial viability.

Financing is another obstacle hindering the expansion of solar manufacturing. Manufacturers require over ₹50,000 crores in the next 3-4 years to establish production capacity, but obtaining funding, especially for smaller players, has proven to be a slow process.

Amid the progress and obstacles, India’s determination to make its mark in solar manufacturing remains unwavering. As the government recalibrates its approach with the ALMM and implements strategies to attract investment, the country’s solar dreams inch closer to realization. While challenges lie ahead, the nation is poised to rise to the occasion, contributing significantly to the global solar energy landscape. As we navigate the path forward, optimism and determination remain the driving forces in India’s quest for solar manufacturing excellence.

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Niveshaay is a SEBI registered (SEBI Registration No. INH200007645) Research Analyst

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