India would require solar modules worth about Rs 15,000 crore to meet its domestic demand of 10 GW per year. Meeting half of this requirement through domestic production could save the country possible forex outflow of Rs 7500 crore per year—according to a report by Council on Energy, Environment and Water (CEEW).
“In the past five years, India, on an average, has imported solar cells and modules worth Rs 17,600 crore annually to meet the demand-supply mismatch. Imported solar modules meet 80 to 90% of the demand,” said the report.
Seizing the opportunity
The report stated Covid-19 pandemic presents India an opportunity to reduce its reliance on imported products and at the same time, boost domestic manufacturing to tap the global demand.
It added a strategic plan is needed to increase the market share of domestic solar products beyond 50%.
“In the short term, the country can focus on setting up an additional 10 GW of manufacturing capacity for ingots, wafers, cells, and modules. The government must provide fiscal and regulatory support to incentivise both domestic and foreign manufacturers to scale up their facilities in India. Import of machinery to manufacture these products should be exempted from customs duty, ensuring competitiveness in the global market,” the report stated.
CEEW Centre for Energy Finance estimates India’s Ministry of Finance collected approximately Rs 4,500 to 5,000 crore from safeguard duties since August 2018.
The report suggested that “to avoid additional cost [in terms of fiscal interventions for domestic manufacturing], this revenue could be allocated to incentivise domestic manufacturing for solar cells; for instance, Rs 2,000 crore can support 10 GW of domestic cell and module production for one year if Rs 2 per watt is provided to domestic manufacturers.”
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