India is poised to become the world’s second-largest solar module producer by 2025, according to a Wood Mackenzie report. This surge positions India to outpace Southeast Asia and cater primarily to the lucrative US market. However, the sector faces challenges, including high production costs and potential adjustments in import tariffs. Despite these hurdles, India’s commitment to sustainable energy and domestic manufacturing aligns with global trends, presenting opportunities for growth.
The future outlook for India’s solar module manufacturing remains promising, with the country aiming to achieve an ambitious 110 GW by 2026, showcasing a commitment to reducing dependence on imports and contributing to a resilient global supply chain in renewable energy.
Image source: Pixabay
India is expected to surpass Southeast Asia as the second-largest producer of solar modules by 2025, catering primarily to US demand, according to a Wood Mackenzie report. This comes at a time when China is predicted to hold more than 80% of the global capacity for the solar module supply chain by 2024.
In 2023, India’s photovoltaic (PV) module manufacturing witnessed a remarkable surge, reaching 38 GW and positioning the country on a trajectory to achieve 110 GW by 2026, according to a CII-EY report. This signifies a significant milestone in India’s solar industry, reflecting a shift towards domestic manufacturing and supply chain independence.
India has demonstrated its leadership in innovation and manufacturing globally with its renewable energy sector, which has over US$ 240 billion in investment potential. For its sustainable energy future, India expects investments in ACC batteries and solar PV to increase significantly. India’s self-sufficiency in renewable technology is supported by export incentives, skilled labour, and reasonably priced electricity available around the clock.
According to the Wood Mackenzie report, India is facing high production costs as a result of a 25% basic customs duty on imported solar cells. And India plans to increase its module exports to the lucrative US market. There is speculation that to support the export ambitions, the Indian government might lower the duty on Chinese modules, which currently incur a 40% tax.
In contrast, the US is building up its own photovoltaic manufacturing capacity under the terms of the Inflation Reduction Act. However, the lack of domestic production of wafers, cells, or glass means that the US will continue to rely on imports, particularly after President Biden’s temporary waiver of solar import tariffs expires in mid-2024.
The solar capacity in Southeast Asia, which is primarily driven by Chinese investments, and the demand in Europe for protective tariffs on Chinese modules because of their non-competitive prices highlight the global changes in the solar module supply chain.
The report goes into more detail about China’s technological leadership in N-type cells and how this will affect the market since 95% of announced global expansions in this field have come from China.
The future of India’s solar module manufacturing appears promising despite the challenges. The country’s ambitious goal to achieve 110 GW by 2026 reflects a commitment to sustainable energy and reducing dependence on imports. As India continues its transition towards domestic manufacturing, opportunities for growth are expected, especially for vertically integrated manufacturers.
Notably, the sector’s growth is positively impacted by India’s focus on domestic manufacturing and the attainment of major milestones in manufacturing capacity. This strategic move places India as a major player in the changing solar module manufacturing landscape and is in line with global trends towards sustainable and locally sourced energy solutions.
In recent years, India has positioned itself as a global leader in trade, innovation, manufacturing, and services related to renewable energy. But in order to reach its full potential, issues with affordability, domestic value addition, competitiveness, renewable energy laws, regulatory frameworks, and infrastructure development must be resolved.
India’s transition to renewable energy represents a unique opportunity to lead in innovation and manufacturing. India’s role in global renewable energy can reduce reliance on imports and improve supply chain resilience, making renewable energy technologies more accessible globally.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.