India’s renewable energy goals may increase dependence on solar imports, GTRI warns

India’s target of installing 500 GW of renewable energy by 2030 could drive its annual solar equipment import bill to USD 30 billion, according to a report by think tank Global Trade Research Initiative (GTRI). 

The report emphasizes that without significant investments in developing a self-reliant solar manufacturing industry, particularly in polysilicon and wafer production, India may struggle to meet its ambitious goals and reduce import costs.

India installed 15 GW of solar capacity in 2023-24, bringing the total to 90.8 GW as of September, a substantial increase from 2.8 GW in 2014. To meet the 2030 target, India needs to accelerate installations to 65-70 GW per year, with over 80% of this projected from solar power. However, India’s current reliance on imports, which amounted to USD 7 billion in 2023-24 (62.6% from China), could hinder progress. China dominates the global solar supply chain, controlling 97% of polysilicon and 80% of solar module production.

GTRI Founder Ajay Srivastava noted that while initiatives like the production-linked incentive (PLI) scheme aim to boost local manufacturing, they are limited due to dependence on imported inputs. The report highlights that 90% of India’s solar manufacturing focuses on assembling imported solar modules, with only 15% local value addition. India also imported USD 4.4 billion worth of ready-to-use modules, USD 1.9 billion in solar cells, and USD 1 billion in other essential parts like inverters and cables in the last fiscal year.

Srivastava stressed that to reduce imports, India must produce solar cells from silica sand, which involves costly polysilicon production and requires advanced technology. He also urged for local production of aluminum frames, glass, and other materials, calling for strong R&D efforts and government support.

The report noted that China remains India’s largest supplier of solar cells and modules, followed by Vietnam, Malaysia, and Thailand. To curb imports, India has imposed a 40% duty on solar modules and a 25% duty on solar cells. However, imports from other Asian countries are exempt under the India-ASEAN free trade agreement if they meet a 35% local value addition requirement.

GTRI suggests seven steps to boost domestic solar manufacturing, including investing in upstream production (from silica sand to finished panels), reducing dependency on imported components, and expanding the PLI scheme to include early-stage solar production. It also recommends building local capacity for aluminum frames and glass, providing targeted subsidies, and developing a skilled workforce for large-scale installations.

Srivastava advised India to collaborate with the US, EU, and Japan to establish large-scale solar manufacturing facilities, promoting an independent solar industry. He added that current import duties should be reassessed to support local manufacturing without increasing consumer costs.

The report highlights that China’s dominance in solar production poses a challenge for countries like India, which aims to be part of the global shift towards renewable energy. China currently controls over 80% of global solar exports and 97% of the polysilicon supply. In 2023, China exported 227 GW of solar modules worth USD 39.5 billion and 38 GW of solar cells worth USD 4.2 billion.

GTRI suggests that global partners like the US, EU, Japan, and India explore building large-scale solar cell manufacturing facilities from the ground up to reduce dependency and strengthen the renewable energy supply chain.