India is advancing its solar energy initiatives with new regulations aimed at boosting domestic manufacturing. The Ministry of New and Renewable Energy (MNRE) has announced that from June 2026, solar companies must use only Indian-made photovoltaic cells to qualify for government procurement. This initiative is part of a broader strategy to enhance self-reliance in the solar sector.
Current Solar Capacity in India
India has made strides in solar energy, with an installed capacity of approximately 92 gigawatts (GW). The country currently has a solar-module manufacturing capacity of around 63 GW and a solar-cell manufacturing capacity of about 5.8 GW. The government aims to expand module capacity to 80 GW and cell manufacturing capacity to 60 GW by the fiscal year 2027.
Government Initiatives
The MNRE has introduced several programmes to support solar energy adoption. The PM rooftop-solar programme and the PM Kusum programme provide financial assistance for solar installations. However, these initiatives now require sourcing from MNRE-approved domestic manufacturers. This shift aims to reduce reliance on imports, primarily from China and Southeast Asia.
Challenges Facing Domestic Manufacturing
Despite the push for local production, Indian solar manufacturers face challenges. The cost of Indian solar cells is 1.5 to 2 times higher than comparable products from China, even after accounting for customs duties. This price disparity could increase the capital costs of solar projects , leading to higher tariffs for consumers.
Future Projections and Investments
The Government of India and industry experts predict substantial growth in solar manufacturing capacity. An estimated investment of Rs 30,000 crore is expected to fuel the growth of domestic solar production. The Adani group has already initiated a 2 GW wafer-manufacturing facility in Gujarat, aiming to become the first integrated manufacturer in India by 2027.
Domestic Supply Chain Gaps
While India is ramping up its solar component production, it still lacks the capacity to manufacture critical components like wafers and ingots. This gap means the country will continue to depend on imports for these essential materials, thereby limiting the effectiveness of the domestic push.
Impact on Solar Power Costs
The increased reliance on domestic solar cells is expected to raise the overall cost of solar power projects. Analysts predict that the capital costs could increase by Rs 5-10 million per megawatt. Consequently, tariffs may rise by 40-50 paise per unit, impacting consumers and the overall market for solar energy.
Conclusion
The MNRE’s new regulations mark step towards self-sufficiency in solar energy. However, the challenges of high costs and reliance on imported components must be addressed to achieve sustainable growth in the sector.
Questions for UPSC:
- Examine the implications of India’s focus on domestic solar panel manufacturing for its energy security.
- What are the key challenges faced by India in achieving self-reliance in solar energy production? Discuss.
- Critically discuss the role of government policies in promoting renewable energy technologies in India.
- With suitable examples, discuss the impact of international trade on domestic manufacturing capabilities in renewable energy sectors.
Answer Hints:
1. Examine the implications of India’s focus on domestic solar panel manufacturing for its energy security.
- Enhances self-reliance, reducing dependence on foreign imports for solar components.
- Mitigates risks associated with supply chain disruptions from international markets.
- Encourages local job creation and technological advancement in the renewable energy sector.
- Potentially increases energy costs due to higher domestic manufacturing prices.
- Aligns with national energy goals and commitments to climate change mitigation.
2. What are the key challenges faced by India in achieving self-reliance in solar energy production? Discuss.
- High production costs of domestic solar cells compared to cheaper imports from China.
- Lack of manufacturing capacity for essential components like wafers and ingots.
- Need for substantial investments to scale up domestic manufacturing capabilities.
- Market competition and pricing pressures affecting profitability for local manufacturers.
- Dependency on foreign technology and expertise for advanced manufacturing processes.
3. Critically discuss the role of government policies in promoting renewable energy technologies in India.
- Implementation of the ALMM to ensure sourcing from approved domestic manufacturers.
- Financial incentives and subsidies under schemes like PM rooftop-solar and PM Kusum.
- Setting ambitious targets for solar capacity expansion to drive industry growth.
- Regulatory frameworks aimed at reducing barriers for renewable energy investments.
- Promotion of research and development to encourage innovation in solar technologies.
4. With suitable examples, discuss the impact of international trade on domestic manufacturing capabilities in renewable energy sectors.
- Reliance on imports for critical solar components hinders local manufacturing growth.
- Price competition from foreign manufacturers affects the viability of domestic producers.
- The Adani group’s investment in a wafer-manufacturing facility exemplifies local efforts to reduce dependency.
- Trade policies and tariffs can either protect or challenge domestic manufacturers.
- International collaborations may enhance technology transfer and skill development in the sector.
