India’s Solar Imports Could Reach $30 Billion Annually by 2030

Context: A recent report by the Global Trade Research Initiative (GTRI) raises concerns about the future of India’s solar industry.

The report emphasizes the increasing influence of China in the global solar market and the difficulties faced by India’s domestic solar manufacturing sector. It estimates that India’s solar imports could surge to $30 billion annually by 2030, pointing to the need for stronger local production and capacity building.

Key Findings of the Global Trade Research Initiative (GTRI) Report:

1. China’s Dominance in Solar Production:

China currently controls more than 80% of the world’s solar production and exports. This dominance significantly affects other nations’ solar industries, including India’s, making them heavily reliant on Chinese imports.

2. Challenges in India’s Solar Manufacturing Sector:
   1. Heavy Dependence on Imports: India is highly dependent on imports for key solar components, particularly solar modules and cells, the majority of which are sourced from China. This limits the growth of India’s domestic manufacturing capacity according to Global Trade Research Initiative (GTRI) .
   2. Shortage of Raw Materials: Global Trade Research Initiative (GTRI) added that India lacks the capacity to produce essential materials like high-purity polysilicon and wafers, which are critical in solar cell manufacturing.
   3. Gaps in Research and Technology: India trails behind in adopting advanced solar technologies such as PERC (Passivated Emitter and Rear Contact) cells, bifacial modules, and thin-film technology.
   4. High Capital Requirements: Establishing solar manufacturing facilities requires significant financial investment, posing challenges for expanding domestic production.

Recommendations from the Global Trade Research Initiative (GTRI) Report:

1. Expansion of the Production Linked Incentive (PLI) Scheme:
   The report suggests expanding the PLI scheme to focus on early-stage solar manufacturing, particularly the upstream production of raw materials like polysilicon and wafers, to enhance India’s local manufacturing capabilities.
2. Increased Investment in Research and Development (R&D):
   India needs to invest more in R&D and advanced solar manufacturing technologies to create an integrated domestic supply chain, reducing its dependence on imports.
3. Reevaluation of Import Duties:
   The report calls for a reassessment of the current import duties on solar modules and cells. Lowering or adjusting these duties could help stimulate domestic manufacturing while reducing reliance on foreign imports.
4. International Collaborations:
   India should seek collaborations with other countries such as the US, EU, and Japan. This would help reduce global dependence on China for solar technology and materials while boosting local production in India.

India’s Initiatives to Boost Solar Manufacturing:

1. Approved List of Models and Manufacturers (ALMM):
   India has introduced the ALMM, which mandates the use of Bureau of Indian Standards (BIS)-certified solar modules in government-backed projects. This aims to ensure quality standards while promoting domestic manufacturing.
2. Production Linked Incentive (PLI) Scheme:
   The PLI scheme provides financial incentives to companies that set up fully integrated solar photovoltaic (PV) manufacturing units. The goal is to encourage the establishment of local production facilities and reduce dependence on imported components.
3. PM-KUSUM Scheme:
   This scheme encourages the use of domestically sourced solar cells and modules, especially for agricultural and rural electrification projects. By promoting local manufacturing, the scheme aims to foster a stronger domestic solar ecosystem.

Current Status of India’s Solar Sector:

• India is the 3rd largest energy-consuming country in the world.
• According to the REN21 Renewables 2024 Global Status Report, India ranks 5th globally in terms of installed solar power capacity.

Commitments:

• At the COP26 summit, India committed to generating 500 GW of non-fossil fuel-based energy by 2030 as part of its ambitious Panchamrit initiative, which is regarded as the largest renewable energy expansion plan in the world.

Solar Energy Growth:

• India’s installed solar energy capacity has grown 30-fold in the last nine years, reaching 89.4 GW by August 2024.
• According to the National Institute of Solar Energy (NISE), India’s solar potential is estimated at 748 GWp.

Investment and Foreign Direct Investment (FDI):

• The renewable energy sector in India allows 100% Foreign Direct Investment (FDI) under the automatic route, as per The Electricity Act of 2003. This applies to both renewable energy generation and distribution projects, encouraging global investment in India’s growing solar sector.

PRACTISE QUESTION:

1. According to the REN21 Renewables 2024 Global Status Report, India ranks 5th globally in solar power capacity. Concerning India’s achievements in solar energy, consider the following statements:

• India has the 5th largest installed solar power capacity in the world, as per the REN21 Renewables 2024 Global Status Report.
• The International Solar Alliance (ISA), an India-led initiative, was launched to promote the use of solar energy among countries located between the Tropic of Cancer and the Tropic of Capricorn.
• India’s ambitious solar power target aims to achieve 100 GW of installed solar capacity by 2030.

(a) One statement is correct.
(b) Two statements are correct.
(c) All three are correct.
(d) None of the above.

Correct Answer: (b)
Explanation:

• Statement 1 is correct. India ranks 5th globally in solar power capacity as per the REN21 Renewables 2024 Global Status Report.
• Statement 2 is correct. The International Solar Alliance (ISA) was launched by India to encourage cooperation on solar energy among countries located between the Tropics.
• Statement 3 is incorrect. At COP26, India pledged to achieve 500 GW of non-fossil fuel-based energy by 2030 as part of the Panchamrit initiative, which is recognized as the world’s largest renewable energy expansion plan.

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