Synopsis
- India’s solar equipment manufacturing capacity is poised for a healthy growth over the next 2-3 years, with module and cell manufacturing capacities of ~80 GW and ~50 GW respectively, in the pipeline. This will entail a capex of nearly Rs 1 lakh crore, with an estimated debt funding of nearly Rs 70,000 crore over the medium term, including investments in polysilicon and wafer capacities.
- The imposition of tariff barriers in the form of BCD on imported cells and modules has increased the cost-competitiveness of domestic cells and modules to an extent. However, the impact is partly offset by international prices languishing at record-low levels.
- The implementation of the Approved List of Models and Manufacturers for solar modules (ALMM-I) is expected to boost demand for domestic modules. This, along with government-aided schemes supporting demand for modules with domestic content requirements (DCR modules), will drive growth. Policy supports for progressive backward integration remains crucial for India’s solar equipment value chain.
- The introduction of ALMM-II for domestic cells may result in an increase the delivered cost of domestic modules by 6-7 cents/Wp, leading to a rise in solar tariffs by 40-50 paise per unit for the short run till local cell supply scales up.
