April 2023

India’s solar power segment depends heavily on imported solar cells and modules. This makes it highly vulnerable to global supply chain disruptions, geopolitical tensions and raw material price escalations. For the country to achieve 200 GW of new solar power capacity by 2030, expanding local manufacturing capabilities is paramount.

There has been a thrust on promoting domestic solar manufacturing for a few years now, with policy initiatives such as safeguard duties, manufacturing-link­ed tenders and domestic content requirements being taken to encourage the adoption of local products. Basic customs duty has been active for over a year and the Approved List of Models and Manufacturers has put a further restriction on imports. Meanwhile, the production-linked incentive (PLI) scheme is driving the development of the domestic solar manufacturing industry on a large scale.

By giving more weightage to fully integrated facilities, that is, manufacturing of polysilicon, wafers, ingots, cells and modules, the PLI scheme is promoting ho­lis­tic development of the solar PV supply chain in the country. Recently, under Tranche II of the PLI scheme, the government allocated a total of 39,600 MW of domestic solar PV module manufacturing capacity to 11 companies. The total out­lay under Tranche II of the PLI scheme is Rs 140 billion and the scheme is ex­pected to bring in investments of Rs 930 billion. With the results of the PLI Tran­che II showing, the domestic manufacturing segment is now also attracting lar­ge renewable energy developers that want to build their own production bases and secure their supply chains.

In another development, the Ministry of New and Renewable Energy has ann­ou­nced the bidding trajectory for renewable energy projects of 50 GW annually between 2023-24 and 2027-28. This is an encouraging step, which will sustain investor confidence in the segment by providing visibility on future capacity additions. It will also give a fillip to the renewable energy manufacturing industry in the country by indicating the demand expected to be created for its equipment.