India’s cumulative module manufacturing nameplate capacity has more than doubled to 38 GW in March 2023 from 18 GW in March 2022, thanks to the government’s Production Linked Incentive (PLI) scheme.

The country is expected to be self-sufficient in solar photovoltaic (PV) module manufacturing by FY2026 as about 110 GW of module production capacity is to come online during the next three years, says a report.

India’s solar PV manufacturing industry is witnessing exponential growth due to frequent announcements of expansion or new investments in the sector, according to a report by JMK Research & Analytics and the Institute of Energy Economics and Financial Analysis.

Besides, the augmentation of infrastructure in all stages of PV manufacturing, from polysilicon to modules, India’s growth will also lead to the simultaneous development of an ancillary market.

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The two tranches of the PLI scheme will help add 51.6 GW of module capacity and at least 27.4 GW of integrated ‘polysilicon-to-module’ capacity in the next three to four years. PLI shall enable India in achieving one of the lowest module prices in the world.

With 110 GW of module capacity in three years, India could become the second-largest PV manufacturing country after China, according to JMK Research’s Founder Jyoti Gulia, Co-author of the report. By then, India will also have a notable presence in all upstream components of PV manufacturing, such as cells, ingots/wafers, and polysilicon.

Approved List of Module Manufacturers

One of the key steps taken by the government to boost demand for domestic solar PV modules was the introduction of the Approved List of Module Manufacturers (ALMM) in 2019.

But even after applying higher basic customs duty (BCD) on imported modules, the cost differential compared with domestic modules is negligible. Hence, the ALMM was seen as a trade barrier protecting the interests of domestic manufacturers.

However, ALMM has been the most important driver for the development of domestic PV manufacturing.

This March, the Ministry of New & Renewable Energy (MNRE) kept the ALMM for solar PV modules in abeyance for FY24. The move provides a breather to solar PV manufacturers, as solar modules can now be imported till April 2024 without the ALMM restriction.

The latest ALMM list, updated on February 27, 2023, by MNRE, includes 70+ domestic manufacturers with an enlisted capacity of 22,389 MW.

While the China+1 strategy may boost the export potential for tier-1 manufacturers, the Indian PV manufacturing sector is still facing headwinds. These include sustained reliance on imports, especially for upstream components (polysilicon and ingots/wafers), ancillaries, and PV machinery.

Although the quality of all tier-1 Indian manufacturers is comparable to global standards, the manufacturers have complained that the domestic consumer base is largely hesitant towards Indian PV products.

In addition, the lack of skilled manpower to install and operate the high-tech machinery, especially for cells and other upstream components, is also an ongoing challenge.

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