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India is set to become self-sufficient in solar photovoltaic (PV) manufacturing, with 110 gigawatts (GW) of new PV module capacity expected to come online within the next three years. A joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research and Analytics shows that India's cumulative module manufacturing "nameplate" capacity doubled from 18 GW in March 2022 to 38 GW in March 2023.
India’s solar module manufacturing capacity could reach 110 GW by 2026. It will also have a notable presence in all upstream components of PV manufacturing, such as cells (59 GW), ingots/wafers (56 GW), and polysilicon (38 GW).
The report identifies favourable policies, such as the Production Linked Incentive (PLI) scheme, as the major driver behind this surge in PV manufacturing.
Gujarat Leads PV Manufacturing Installations
Gujarat, India's leading state in PV manufacturing installations, accounts for nearly 57% of all upcoming PV manufacturing capacity. Its cheaper industrial electricity prices and easy access to ports for imports and exports make it an attractive location for manufacturers.
India Must Compete for Dominance in Global PV Market
After achieving self-sufficiency, India should aim to challenge China's dominance in the global PV module market by competing in quality and scale. However, the report cites the country's reliance on China for upstream components of PV modules, such as polysilicon and ingots/wafers, as a significant hurdle. The report recommends augmenting the PLI scheme with more upstream components, PV equipment machinery, and ancillary components to develop a more holistic PV manufacturing ecosystem.
Policy Stability Required for Investor Confidence
The report highlights the need for policy stability to sustain investor confidence in the market and calls for India to build enough PV capacity to satisfy local demand while maintaining a healthy global presence. India's current major PV export markets - the U.S. and Europe - are ramping up their own PV manufacturing capabilities, making it imperative for India to explore other export markets for its tier-1 manufacturers.
Govt's PLI Scheme Key Driver for Manufacturing Ecosystem
The central government's PLI scheme encouraging domestic manufacturing of "high efficiency" solar PV modules is one of the primary catalysts spurring the growth of India's entire PV manufacturing ecosystem. The Ministry of New and Renewable Energy (MNRE) has allocated a capacity of 48,337 megawatts (MW) of domestic solar PV modules manufacturing capacity across two tranches of its PLI scheme, with a total support of more than Rs 18,500 crore. MNRE Secretary BS Bhalla has stated that India will have 48 GW of annual production capacity of "Made in India" solar PV modules and will touch 100 GW by the end of 2026.