L R AS Published on Monday 31 January 2022 - n° 391 - Categories:industrial strategy, India
Confidence in India's photovoltaic development
Solar panel manufacturing capacity in India is set to increase by 400% (fivefold) in four years, from the current 8 GW at the end of March 2021, to 38 to 43 GW by March 2025.
Production capacity will be driven by strong domestic demand, favourable government policy, increased conversion efficiency and competitive pricing.
This projection is based on the plans of the eleven major Indian panel manufacturers, which account for around 80% of current panel production capacity in India, and on new market entrants.
Products manufactured in India could prove more attractive than imports due to more predictable supply chains, the absence of high shipping costs, potentially more competitive pricing and protective tariffs.
As at 31 March 2021, India had 3 GW of solar cell production capacity, mainly used for in-house panel production. The country does not yet have silicon or wafer production capacity, and the lack of 'backward integration' of these stages of the solar value chain makes Indian-made panels uncompetitive with cheaper imports (prior to the introduction of tariffs in April 2022).
India's 8 GW of panel production capacity remains under-utilised, with only 20% in operation, because panel imports from China are 15-25% cheaper - or $0.04-0.06/watt - due to government subsidies and economies of scale. As a result, almost 80% of India's demand for solar panels is met by Chinese products.
PV Magazine, 24 January 2022
Editor's note With India, there is always a past and a future. What used to be true is already changing. Two major measures are changing Indian photovoltaics: the recent measures taken by the government to stimulate panel and cell production. This initiative has been so successful that the incentives have had to be increased. The second measure is the introduction from April 2022 of a 40% customs duty on cell and panel imports from China, which will make imported products more expensive and encourage local production.
