Boosting Solar Independence: India's Push For Domestic Manufacturing Faces Challenges From Cheap Imports
As India strives for a clean energy transition, solar power has emerged as a key player in the country”s sustainable energy landscape. The government is actively encouraging investments in the solar sector, but a critical challenge persists – the conflict between domestic content and the allure of inexpensive imports.
Government Initiatives:
The Ministry of New & Renewable Energy”s Grid Solar Division recently issued an office memorandum detailing penalties for violations of domestic content requirements (DCR) for solar photovoltaic (PV) power projects under the ministry”s schemes and programs. The government has been advocating for the domestic manufacturing of solar PV cells and modules, whenever permitted by the World Trade Organization (WTO).
To curb policy misuse, the ministry had previously outlined penalties in 2018, including criminal charges, blacklisting of developers, forfeiture of relevant bank guarantees, disciplinary action against officers, and more. Despite these measures, instances of using cheap imported products persist, especially from Chinese manufacturers.
Current Challenges:
While the government is implementing the Production Linked Incentive (PLI) scheme to boost manufacturing capacity, the challenge lies in achieving gigawatt-scale production in high-efficiency solar PV modules. This endeavor requires time, and until India establishes sufficient production capacity, the clash between domestic and imported solar products continues.
Office Memorandum Impact:
The latest office memorandum primarily targets previously identified DCR-based projects, aiming to bring domestic and imported products on an equal footing. However, solar power project developers are exempted from the requirement to procure solar modules from manufacturers listed in the Approved List of Models and Manufacturers (ALMM). This exemption is applicable to projects commissioned until March 31, 2024, easing the transition for ongoing projects.
Focus on Efficiency:
As the government strives to register only solar panels with domestically manufactured cells, wafers, and polysilicon under the ALMM, the emphasis is on boosting domestic manufacturing and supporting the “Make-in-India” initiative. Industry observers suggest that this move will not only make domestic products cost-competitive but also drive the production of efficient solar panels.
Industry Perspective:
The National Solar Energy Federation of India (NSEFI), emphasises the importance of adhering to DCR rules in schemes involving subsidies and incentives. He sees the notification as a reinforcement of DCR enforcement in various schemes, contributing to India”s emergence as a significant solar manufacturing base.
Looking Ahead:
India”s solar energy ambitions align with its broader goal of self-reliance in energy resources. While the nation steadily progresses as a major solar manufacturing hub, challenges persist in achieving vertical integration, especially at the cell level. With initiatives like PLI I and II, India anticipates overcoming these challenges by the end of 2024.
As the government navigates the delicate balance between promoting domestic manufacturing and addressing the demand for affordable solar solutions, India”s solar industry stands at a critical juncture. The focus on efficiency and policy consistency will play key roles in determining the success of the country”s solar initiatives and their contribution to a sustainable energy future.
