India could become the world’s second-largest solar photovoltaic manufacturer by 2026: Report
A file photo of a solar power plant in Pavagada in Tumakuru district.
| Photo Credit: AP
With 110 gigawatts (GW) of solar photovoltaic (PV) module capacity set to come online in the next three years, India will become self-sufficient and will be the second-largest PV manufacturing country after China, says a new joint report from the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics.
The report finds that India’s cumulative module manufacturing nameplate capacity more than doubled from 18GW in March 2022 to 38GW in March 2023.
Jyoti Gulia, founder, JMK, and co-author of the report, said a favourable policy environment created by the Indian government is the major driver for this push in India towards PV manufacturing. “Production linked incentive (PLI) scheme may prove to be the necessary catalyst which will significantly augment India’s PV manufacturing capacity in the coming years,” she said.
Gujarat leading State
“In terms of upcoming PV manufacturing installations, Gujarat is the leading state in India. It accounts for nearly 57% of all the upcoming PV manufacturing capacity. Some major reasons manufacturers chose Gujarat for setting up their PV fabrication facilities include cheaper industrial electricity prices and easy access to ports for imports and exports,” she added.
The report’s co-author Vibhuti Garg, Director, South Asia, IEEFA, said after India attains self-sufficiency in two to three years, the next course of action should be to challenge and compete for dominance in both quality and scale in the global PV module market. Despite the aggressive market drivers, there are minor hurdles that are impeding the growth of the PV manufacturing industry. Therefore, policy stability is necessary to sustain investor confidence in the market, she added.
Reliance on China
The report identifies some hurdles holding back the domestic PV manufacturing industry from realising its full growth potential, chief among them over-reliance on Chinese imports for upstream components of PV modules such as polysilicon and ingots/wafers.
According to the report, the sustained reliance on China for its raw material is such that almost all (around 95%) of the upstream PV manufacturing capabilities are still in China. Another is the dearth of skilled manpower, especially in the manufacturing of these upstream components, Ms. Gulia added.
What is China doing differently compared to India to be at the top? “China has already achieved economies of scale given the huge PV manufacturing capacity that they have. Also, to bring this market to this huge scale, the Chinese government has offered cheap credit, free land, cheap loans, research funds, tax rebates, and sometimes even cash to support its manufacturing sector. Because of their large-scale integrated facilities and government support, Chinese manufacturers are able to absorb larger shares of the profit of their operational revenues. Thus, they are always able to invest significantly in a robust R&D infrastructure, hence always staying ahead of the curve than the rest of the world,” explained Ms. Gulia.
Holistic development
The report recommends that the government augment the PLI scheme to also include more upstream components, PV equipment machinery and ancillary components for more holistic development of the PV manufacturing ecosystem.
“Moreover, as part of the long-term expansion plan, 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. However, India’s current major PV export markets – the U.S. and Europe – are ramping up their own PV manufacturing capabilities. In future, these countries may also potentially become self-sufficient in PV manufacturing. As a result, there is a greater impetus to explore other export markets for Indian tier-1 manufacturers,” the report added.
