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India could become the world’s 2nd-largest solar PV manufacturer by 2026

GS Paper 3

Syllabus: Energy

 

Source: TH

 Context: According to a new report, India will become self-sufficient and will be the 2nd-largest photovoltaic (PV) manufacturing country after China by 2026.

 

Highlights of the report:

  • 110 gigawatts (GW) of solar PV module capacity is set to come online in India in the next three years
  • India’s cumulative module manufacturing capacity more than doubled from 18GW in March 2022 to 38GW in March 2023.
  • In terms of upcoming PV manufacturing installations, Gujarat (accounts for nearly 57%) is the leading state in India, due to cheaper industrial electricity prices and easy access to ports for imports/exports.

 

Initiatives taken by the Indian govt: A favourable policy environment like the Production linked incentive (PLI) scheme.

 

Challenges for India:

  • Policy instability
  • To compete for dominance in both quality and scale in the global PV module market
  • Reliance on China for upstream components of PV modules such as polysilicon and ingots/wafers
  • A dearth of skilled manpower
  • India’s current major PV export markets (U.S. and Europe) are ramping up their own PV manufacturing capabilities.

 

Lessons to be learnt from China:

  • China has already achieved economies of scale by offering policy support – cheap credit, free land, cheap loans, research funds, tax rebates, etc.
  • Chinese manufacturers are able to absorb larger shares of the profit of their operational revenues → invest significantly in a robust R&D infrastructure → stay ahead of the rest of the world.

 

Recommendations:

  • For holistic development, the government must augment the PLI scheme to also include more upstream components.
  • India must aim to build enough PV capacity to satisfy local demand and maintain a healthy global presence to become a viable competitor to Chinese PV products.
  • There must be a greater impetus to explore other export markets for Indian tier-1 manufacturers.