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Helping Indian solar shine brighter

G Balachandar Chennai | Updated on January 11, 2021

Current production capacity is able to meet only 35 per cent of the total annual domestic demand   -  Getty Images/iStockphoto

Domestic manufacture of PV modules needs long-term policy support: report

A self-reliant solar sector would not only cater to domestic demand but could also open new avenues of exports, especially after the Covid-19 supply chain shock that forced nations to look at alternatives to China.

According to a report of the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research, about $18 billion worth of products will have to be imported annually to achieve India’s 450 GW renewable power target.

Instead, if a small proportion of this amount, $3-3.5 billion, were to be spent on building the domestic sector it would give long-term results and make India’s solar sector completely ‘Atmanirbhar Bharat’.

China accounts for 80 per cent of the imported modules in India, while the rest come from Thailand, Malaysia and Vietnam.

Since 2015, India has, on average, imported solar cells and modules worth ₹176 billion ($2.6 billion) annually.

Domestic production of modules (at about 15GW capacity now) is yet to attain critical mass. Current production capacity meets only 35 per cent of total annual domestic demand. The share of Indian PV (photovoltaic) module sales compared to overall global sales is insignificant.

Self-reliance initiative

With a renewed emphasis on the “self-reliant India” initiative, the government is now focussing on building a complete ecosystem to boost the domestic PV manufacturing industry through a range of support measures.

In the wake of all these factors, many Indian players, including Adani, Renew, Azure and Vikram Solar, have announced plans to expand their existing facilities or set up completely new integrated facilities. Even government entities like Coal India are looking to set up an integrated wafer manufacturing facility, it said.

However, these players will face stiff competition from the leading global players.

Chinese firms’ aggressive ongoing capacity expansion and growing thrust towards technology advancement are yielding development of superior efficiency, yet cost-effective, PV cells and modules.

Trade volume

The planned initiatives should not be limited to boosting the domestic market. The focus should also be on helping players expand their horizons to be globally competitive.

About 80 per cent of India’s market share of exports is to the US. The exports of each of the top four players — Vikram Solar, Waaree, Adani Solar and Tata — constitute 25-30 per cent of their total trade volume. On the other hand, Chinese manufacturers trade 66 per cent of their production volume on average in the overseas market, the report said.

Well-crafted plans are required to support backward integration now and plan initiatives to set up cell, wafer and ingot manufacturing facilities as well as module manufacturing.

State governments can intervene at these junctures by providing land, utilities, etc, at concessional rates and various regulatory approvals and permissions in a more timely and efficient manner if competition against China is to be successful over the long term.

India should also focus on spending more on R&D to build a long-term, sustainable segment; 1-3 per cent of the gross revenue has been utilised for R&D by the Chinese players every year. In India, on the other hand, there is not much investment in R&D, even by the leading players.

Published on January 11, 2021

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