India’s solar equipment imports may surge to $30 billion by 2030

New Delhi: Despite production linked incentive (PLI) scheme to boost local manufacturing India’s annual import bill of solar equipments may surge to $30 billion by 2030 from around $7 billion in the financial year ended March 2024, with most of the shipments coming from China, think-tank Global Trade Research Initiative (GTRI) said in a report on Sunday.  

In 2023-24, 62.6 per cent of India’s solar equipment imports came from China. The total solar capacity installed during FY24 stood at 15 gigawatts (GW).

In order to meet the target of 500 GW of installed electricity capacity from non-fossil fuel sources by 2030 as promised at COP26, India would need to add 65-70 GW of solar power capacity each year. The import of solar equipment would increase in similar proportions.

“Given India’s limited local manufacturing and heavy reliance on imports, reaching this capacity could drive the country’s annual solar import bill from the current $7 billion to around $30 billion, with most imports coming from China,” GTRI said.

Around 90 per cent of solar manufacturing in India involves assembling solar modules from imported cells with 15 per cent local value addition. In FY24, India imported solar cells worth around $1.9 billion.

Very few Indian companies manufacture commercial scale solar cells from imported polysilicon or wafers that adds 30-40 per cent value locally. None produce solar cells from scratch using silica sands.

While initiatives like the PLI scheme aim to boost local manufacturing, impact is limited as they rely on large scale use of imported inputs, the think tank said.

China controls 97 per cent of global polysilicon production and 80% of solar module manufacturing, making it difficult for India or any country to compete due to lower prices from China.

China is India's largest supplier, providing $3.89 billion worth of solar cells and modules. Vietnam was the second-largest supplier with $1.02 billion (16.5 per cent), followed by Malaysia at $549.8 million (8.9 per cent), and Thailand, which supplied $248.8 million worth of solar cells (4 per cent) during the year.

Even the imports which come from the countries like Vietnam, Malaysia and Thailand are also dependent to a great extent on the Chinese supplies.

“Developing a self-reliant solar manufacturing industry in India will require significant investment to create an integrated supply chain, especially in areas like polysilicon and wafer production. Without this, India may continue to face high import costs and struggle to meet its renewable energy goals,” GTRI said.