Solar imports could soar to $30 billion annually as India targets 2030 renewable goals: GTRI

India has added 15 GW of solar capacity in 2023-24, bringing the total to 90.8 GW by September, a significant increase from just 2.8 GW in 2014. However, GTRI estimates that to achieve the 500 GW target by 2030, the country must increase installations to 65-70 GW annually, with solar power expected to account for over 80 per cent of this capacity. “This target appears highly ambitious, especially considering India’s dependence on imports, which could push solar imports to $30 billion annually,” the report stated.

The Economic Survey 2023-24 had highlighted that China’s manufacturing trade surplus has been expanding since 2019 due to weak domestic demand and increasing industrial capacity. The mismatch between domestic supply and demand in China has widened in recent years, prompting Chinese companies to seek additional markets overseas, the survey noted. In 2023-24, India imported solar equipment worth $7 billion, with China supplying 62.6 per cent. China’s dominance in global solar manufacturing—controlling 97 per cent of polysilicon production and 80 per cent of solar modules—makes it challenging for other countries to compete.

While India has introduced initiatives like the PLI scheme to boost local manufacturing, GTRI founder Ajay Srivastava pointed out that these efforts have had limited impact, as they continue to rely heavily on imported inputs. The report noted that India’s solar manufacturing sector is still in its infancy, with most projects dependent on imported, ready-to-use solar modules. In the last fiscal year, India imported $4.4 billion worth of these modules, along with solar cells and other key components such as inverters and cables.

“Nearly 90 per cent of India’s solar manufacturing involves assembling modules from imported cells, with only 15 per cent local value addition,” the report said. It added that only a few Indian companies manufacture solar cells at a commercial scale, and none produce solar cells from scratch using domestic materials. To reduce imports, Srivastava emphasised that India needs to invest in the production of solar cells starting from silica refining, which involves costly and energy-intensive processes such as polysilicon production.

Srivastava also highlighted the importance of domestic production of key materials like aluminium frames and glass, which will require strong research and development efforts and significant government support. The report stated that China remains India’s largest supplier of solar equipment, followed by Vietnam, Malaysia, and Thailand. To reduce dependency on China, India has imposed customs duties of 40 per cent on solar modules and 25 per cent on solar cells. However, imports from ASEAN countries are exempt from these duties under the India-ASEAN free trade agreement.

GTRI recommended several steps to boost domestic manufacturing, including investments in upstream solar production, expanding the scope of the PLI scheme, and creating a skilled workforce. Srivastava also suggested that India should collaborate with countries like the US, the EU, and Japan to establish large-scale solar manufacturing facilities. The global shift towards renewable energy, led by the US, EU, Japan, and India, heavily relies on solar power, which constitutes a significant portion of the renewable energy mix in most countries. With control over 80 per cent of global solar production, China remains a dominant player, exporting $39.5 billion worth of solar modules in 2023 alone.