In a sign that the ‘Atmanirbhar Bharat’ initiative by the Centre may be showing early progress in the solar energy sector, the Ministry of Renewable Energy has received proposals from various entities for the manufacturing of over 10 gigawatts (GW) of new solar equipment. Notable players submitting proposals include US-based First Solar, Renew Power from Gurgaon, Vikram Solar based in Kolkata, and Waaree Energies headquartered in Delhi.
This increased interest in domestic solar equipment manufacturing aligns with the government’s efforts to impose additional duties on imports across various sectors, including solar power. R K Singh, the Power and Renewable Energy Minister, mentioned that the shift from short-term safeguard duties to customs duties has encouraged the industry to make long-term commitments in terms of investments.
While the official implementation of the proposed basic customs duty of around 20-25 percent on solar equipment is pending, Minister Singh highlighted a 5 percent interest subvention scheme for domestic manufacturing that is under consideration by the Ministry of Finance. He assured that the duty changes would be compliant with World Trade Organization (WTO) regulations.
India’s goal is to establish 100 GW of solar capacity by 2022, a significant increase from the current 34.6 GW. The push for domestic manufacturing is driven by the desire to enhance cost competitiveness and reduce dependency on imports, especially considering that Chinese modules are up to 10% cheaper. Singh also mentioned the consideration of manufacturing zones dedicated to solar manufacturing.
Despite India’s progress in solar capacity addition, its domestic solar equipment manufacturing industry has struggled to capitalize on the opportunity. Currently, India’s annual capacity for solar cell manufacturing is around 3 GW, far below the 20 GW demand. The majority of inputs and components are imported from China. The government’s move to shift from safeguard duties to basic customs duties has spurred new proposals, including plans from Vikram Solar, ReNew Power, and Waaree Energies to set up manufacturing facilities with capacities ranging from 2 GW to 3 GW.
In addition to these proposals, major players like Adani Green Energy and Azure Power are also set to establish manufacturing capacities through agreements with the Solar Energy Corporation of India. Despite previous initiatives to incentivize domestic production, the expected scale-up did not materialize due to the complexity and capital intensity of solar cell manufacturing, coupled with rapid technological upgrades every 8-10 months. China remains a dominant player in global solar wafer and ingot manufacturing, with its companies controlling a significant share of the Indian solar components market.
