India’s solar energy capacity: The ‘import restrictions’ on solar PV cells

Source: The post India’s solar energy capacity has been created, based on the article “The ‘import restrictions’ on solar PV cells” published in “The Hindu” on 10th April 2024.

UPSC Syllabus Topic: GS Paper 3-infrastructure- renewable energy

News: The article discusses India’s Ministry of New and Renewable Energy re-introducing the Approved List of Models and Manufacturers of Solar Photovoltaic Modules (ALMM). This list encourages the use of locally made solar equipment in government projects to reduce dependence on imports and support India’s solar industry. India’s solar energy capacity

What is the status of India’s solar energy capacity?

India’s solar energy capacity is growing, aiming for 500 GW from non-fossil fuels by 2030.

India heavily relies on imports to meet its solar energy needs, particularly from China and Vietnam.

China is a major supplier, contributing to 53% of India’s solar cell imports and 63% of solar PV modules.

In the past five years, India’s solar import value reached approximately $11.17 billion.

China’s dominance in the sector is further highlighted by its 80% share in global manufacturing capacity for key solar components.

For details information on India’s solar energy status read here

Why is China a leading exporter?

1.Lower costs of power supplied to the industry play a significant role, as electricity is a major part of production costs. For instance, electricity accounts for over 40% of the costs in making polysilicon and around 20% for ingots and wafers.

2.The Chinese government has strategically prioritized solar PV as a key sector, supporting it through policies.
For details information on Challenges faced by local solar panel manufacturers read here

What incentives has the Indian government taken to improve its solar energy capacity?

1.Reintroduced ALMM: The Indian government reintroduced the Approved List of Models and Manufacturers (ALMM) to prioritize domestic solar products in government projects. The ALMM list aims to support local manufacturers and was reactivated as part of India’s strategy to reduce import dependence and boost local manufacturing in the solar energy sector.
For details information on ALMM read Article 1, Article 2

2.The Production Linked Incentive (PLI) scheme, with an allocation of ₹19,500 crore, is aimed at scaling up the entire solar manufacturing chain in India.

3.Customs duties of 40% on solar PV modules and 25% on solar cells were introduced to reduce dependency on imports. However, these duties were later halved due to slow solar capacity additions and pressure from low-cost imports.

What is the future of India’s solar energy capacity?

Government Ambitions: India aims for 500 GW of non-fossil fuel capacity by 2030, emphasizing solar power.

Rapid Demand Growth: India is experiencing the fastest growth in electricity demand among major economies, partly driven by efforts to combat extreme weather.

Vast Potential: With an estimated solar potential of 748.99 GW, India has a significant opportunity to harness solar energy.

Question for practice:

Discuss the impact of China’s dominance in supplying solar equipment to India and the measures taken by the Indian government to bolster domestic manufacturing and reduce import dependency in the solar energy sector.