India has the opportunity to be an exporter to the world in the solar equipment manufacturing, which is currently dominated by one country, said Eric Garcetti, the US ambassador in New Delhi.
The country Garcetti was referring to is China, which accounts for more than 80% of all of the world's polysilicon, a key input in the making of solar panels.
Overall, China's exports of solar modules grew by a third in 2023 to 220,000 megawatts of generation capacity, according to data from consulting firm Ember cited by Reuters in a recent report.
However, many small Chinese wafer manufacturers are reportedly on the brink of bankruptcy because of high production capacity, falling demand and plunging prices. Some of them are working at 40% capacity, according to a January report.
Europe, the biggest purchaser of Chinese solar modules, has cut back its share of imports from China to 46% in 2023 from 55% a year earlier.
Meanwhile, India exported solar panels worth over $1.1 billion in the first six months of the current financial year. Earlier, India did export over a billion dollar worth of modules in March 2022, but it took an entire year.
Almost all (98%) of the solar modules exported from India went to the US. However, supplies from India account for a little less than a tenth of what the US imported between January and November 2023, according to recent data from Bloomberg NEF.
A billion dollar worth of exports from India is still too small compared to China's dominance in solar panel manufacturing. In fact, solar project developers in India, which has the world's fifth largest deployment of solar modules — get half of their panels from China, according to data from the Ministry of New and Renewable Energy.
US imposed anti-dumping duties on solar products made in China in 2021 because bulk of the solar panel manufacturing takes place in the Xinjiang province, allegedly using Uyghur Muslims as "forced labour".
However, in June 2022, US President Joe Biden waived off the tariff for two years in an emergency move to meet a surge in domestic demand. The waiver will end in June 2024.
Such is the dominance of China, that even products made in other countries, including those from India, were found to have Chinese inputs.
As part of Washington D.C's attempt to diversify chains and reduce reliance on China in the transition to renewable energy sources, FirstSolar, America's biggest player in the space, has invested $700 million in setting up a new panel manufacturing plant in Tamil Nadu, India.
The First Solar unit with a 3.3-gigawatt annual generation capacity, which got $500 million in subsidised debt from a US government agency, was inaugurated in January 2024.
Some of India's biggest conglomerates including the Tata, Adani, Jindal and Ambani, have thrown their hat into the ring.
<strong>These are some of the steps taken by the Indian government to boost solar panel manufacturing in India:</strong>
Foreign Direct Investment (FDI) in the space is allowed entirely under the automatic route i.e. no need for government approvals.
₹24,000 crore outlay for production-linked incentive (PLI) scheme for National Programme on High Efficiency Solar Photovoltaic (PV) Modules.
Under the PLI scheme, by April 2023, the government had picked 14 bidders in two tranches, with a combined capacity of making panels that can generate 48 GW of solar power a year.
There's also a project development cell for attracting and facilitating investments.
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