India is projected to become the world’s second-largest solar module manufacturer by 2025, a significant advancement in the global renewable energy landscape. This progression is underpinned by a combination of factors, including strong domestic demand, favorable government policies, advancements in module conversion efficiency, and competitive pricing.
Data and Numbers
- Manufacturing Capacity: By the end of March 2025, India’s annual solar module manufacturing capacity is expected to reach between 38 to 43 gigawatts (GW). This marks a nearly 400% increase from the 8GW per year capacity as of early 2021.
- Investment: Around INR 50,000 crore (approximately $6.71 billion) is estimated to be invested across the solar module value chain in India through fiscal 2024-2025. This investment aims to bolster both module and cell manufacturing capacities by 30-35GW each. The focus is also on integrating newer technologies such as mono PERC and bifacial modules, which have higher conversion efficiencies comparable to imports.
- Domestic Demand: Crisil, a leading ratings agency, anticipates India to add about 14GW of solar generation capacity per year in the current and subsequent fiscal years, fueling the demand for solar cells and modules.
- Policies and Tariffs: Indian government policies, such as a 40% customs duty on imported modules and the production-linked incentive (PLI) scheme, are designed to boost domestic production. These measures aim to make Indian modules cost-competitive, potentially by $2-3 cents per watt.
- Current State: As of early 2021, India had a solar cell capacity of 3GW, primarily for in-house module production, and an effective solar panel production capacity of 8GW. However, this capacity is largely under-utilized, with about 80% of India’s solar module demand being met by imports, primarily from China.
Impact of India’s Solar Manufacturing Progress
- Global Positioning: India’s rise as a major solar module manufacturer positions it as a key player in the global renewable energy sector. This shift is significant, particularly in the context of China’s dominance in the solar module supply chain, where it is predicted to hold over 80% of the global capacity.
- Economic and Industrial Impact: The massive scale-up in manufacturing capacity will likely have a substantial economic and industrial impact. It involves large-scale investments and could lead to significant job creation and technological advancements within India.
- Energy Security and Independence: Increasing domestic production capabilities can enhance India’s energy security, reducing dependency on imports, particularly from China. This move towards self-reliance is crucial, given the current underutilization of domestic capacity due to cheaper imports.
- Export Opportunities: India is expected to focus primarily on catering to the U.S. market, which remains reliant on imports due to the absence of domestic production of critical components like wafers and cells.
- Environmental Benefits: The growth in solar module manufacturing aligns with global efforts to transition to renewable energy sources, offering significant environmental benefits, including reductions in greenhouse gas emissions.
- Challenges: Despite these positives, India faces challenges like high production costs, partly due to import duties on solar cells, and the need to compete with the heavily subsidized and scale-driven Chinese market.
In conclusion, India’s anticipated ascent to becoming the world’s second-largest solar module manufacturer by 2025 represents a transformative shift in the global renewable energy domain. This development, driven by substantial investments, policy support, and technological advancements, not only enhances India’s industrial and economic landscape but also contributes significantly to global efforts in combating climate change through sustainable energy solutions.