Against the current annual demand of 20GW, India’s installed manufacturing capacity is 3.1GW of PV cells and 11GW of solar modules. Out of this 20GW of annual demand, nearly 85% is imported. The Indian solar industry is heavily dependent on Chinese imports. 80% of demand for solar cells and modules are fulfilled by Chinese companies. The pandemic has severely impacted this supply and it has been realized that India needs to focus on improving its domestic manufacturing capabilities to decrease energy dependency on China.
How can India go about in reducing its dependency on Chinese imports? First of all, there is a need to layout a clear market access plan for the next 4 to 5 years by announcing more projects like the CPSE scheme which can encourage manufacturers in setting up units. (Recently the MNRE launched the CPSE scheme in which 12,000MW projects would be put up by Central and state PSUs)
In terms of manufacturing might, the time has come to improve and increase economies of scale like China. For this to happen, efforts should be made in developing expertise in manufacturing with a complete value chain. To support this, the government should either support the manufacturers by levying custom duties for an elongated period of few years to stop Chinese dumping or should totally ban imports for a prolonged period and start Make In India. This will instill confidence and assurance amongst manufacturers and lay the ground work for complete backward integration and create a scenario for building a manufacturing base in India.
The government should provide support in acquiring capital and address the interest cost which is 12 – 13 percent compared to 5 – 6 percent enjoyed by Chinese manufacturers.
Along with focusing on manufacturing ingots, wafers, cells, and modules, India also needs to start manufacturing other ancillary equipment like back sheets, EVAs, glass, inverters, cables etc. which will help in creating a complete eco-system.
In a positive and encouraging move, the Ministry of New & Renewable Energy (MNRE) has initiated action by urging states to set up renewable energy equipment manufacturing parks to meet domestic demand as well as to make India a global manufacturing hub.
India has the technical manpower and the demand. The scenario is perfect. Now is the need to enhance core competence, capital and capacity to scale manufacturing to a level that can substitute imports. Atma Nirbhar Bharat Abhiyaan can be a possibility and a reality.