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.
