Solar panels and solar fans are displayed among other electronics for sale at a shop inside a wholesale electronics market in Kolkata on March 19, 2024.
| Photo Credit: Reuters
The story so far: To incentivise India’s solar module manufacturing industry, the Ministry of New and Renewable Energy (MNRE) has brought into effect from April 1 an executive order, The Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019.
What is the context of the executive order?
This order was first issued by the MNRE in 2019 and requires makers of solar modules to voluntarily submit to an inspection of their manufacturing facilities by the National Institute of Solar Energy, a Ministry-affiliated body. Being on the list as an ‘approved’ manufacturing facility certifies a company as a legitimate manufacturer of solar panels and not a mere importer or assembler. This became necessary because India’s solar industry, its claim of indigenousness notwithstanding, is heavily reliant on imports of cheaper and comparable-quality solar modules from China.
Editorial | Solar surge: Moving away from imported solar panels
Modules are multiple solar panels joined together. Solar panels are an assembly of solar cells. Despite being among the top manufacturers in the world and a commitment to scale solar installation four-fold by 2030, local production of these cells and modules is much below demand. India also has limited capacity to make the raw material of a cell — ingots, wafers — and is dependent on imported cells.
Why is India reliant on imports?
The creation of such a list was also aimed at restricting imports from China, which controls nearly 80% of the global supply, with the downturn in diplomatic relations between the countries also being a factor. India has ambitious plans of sourcing about 500 GW, nearly half its requirement of electricity, from non-fossil fuel sources by 2030. This would mean at least 280 GW from solar power by that year or at least 40 GW of solar capacity being annually added until 2030. In the last five years, this has barely crossed 13 GW though the government has claimed that COVID-19 affected this trajectory. The difficulty is that meeting the targets require many more solar panels and component cells than India’s domestic industry can supply.
If the list is voluntary why pay to be on it?
The major advantage of being on the list is eligibility to compete for tenders issued by the government for its flagship solar energy programmes. This includes among others the recently announced PM Surya Ghar Muft Bijli Yojana. The scheme envisages subsidising rooftop solar installations for nearly one crore households in the country involving an estimated subsidy of ₹75,000 crore. However, only domestic manufacturers, certified as part of the Approved Models and Manufacturers (AMM) list, would be eligible. There is also another scheme called the PM KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan) that aims to provide solar pumpsets and rural electrification. For manufacturers to be eligible to provide components under this scheme, they have to be certified as genuine local manufacturers. The government also has a ₹24,000 crore scheme, called the Production Linked Incentive Scheme, that is targetted at incentivising domestic manufacture of solar panels and their components. Eligibility for this scheme too requires one to be a bona fide local manufacturer. So far, 14 major companies have become eligible for incentives to manufacture solar modules worth 48 GW. However, these restrictions apply only to fresh projects and plants and facilities commissioned before March 2024 can rely on imported modules.
Is India’s manufacturing capacity adequate?
Last year was a fortunate year for Indians in the solar business. China which supplies over 80% of solar components globally saw a curb in orders from the U.S. on the grounds that the former relied on “forced labour” by Uiyghur Muslims in the Xinjiang province. Europe too scaled back imports from China and a beneficiary of this was India which exported nearly $1 billion worth of modules in six months of 2023-24. However, reports suggest that the U.S. might roll back duties on China and this could again mean uncertainty for the future of Indian exports. It is estimated that nearly half of India’s solar modules are imported from China and the demand-supply mismatch is expected to persist. The government, however, has claimed that beginning this year, there will be a significant rise in manufacturing capacity. While the list of certified manufacturers on the AMM list has grown to 82 according to the MNRE, there is yet no list of such manufacturers of solar cells, implying that India is still far away from achieving a comfortable degree of self-reliance.
