Is Atmarnirbharta that Easy for India’s Solar Story?

Atmanirbhar Bharat is the vision of the Hon’ble Prime Minister of India for making India a bigger and more important part of the global economy. He formally launched the ‘Atmanirbhar Bharat Abhiyan’ or ‘Self-Reliant India Mission’ during the announcement of India’s COVID–19 pandemic related economic package in May 2020.

Atmanirbhar Bharat translates to a self-reliant India or self-sufficient India and this would be possible by adopting policies that are efficient, competitive, resilient, self-sustaining, and self-generating. 

 

Amidst the global economic turmoil on the back of coronavirus pandemic, the Government’s ‘Make in India’ initiative or ‘AatmaNirbhar Bharat’ Abhiyan has got its much-needed ground. Also, the supply disruptions mainly from China since the beginning of 2020 when China was in Covid-19 lockdown then followed by India, has forced both the solar energy industry stakeholders and the government to think more optimistically about making India self-reliant in terms of solar energy equipment manufacturing.

 

Now, although this is a path-breaking initiative that has been announced by the Hon’ble PM, it has certainly created a divide among the stakeholders with manufacturers supporting the decision and project developers not really on board. 

We can all agree that ramping up of renewable energy manufacturing in India can open up infinite opportunities for domestic manufacturers not only within the country but globally as well in terms of exports and job creation, however the road towards Atmanirbharta is a challenging one and certain policy hurdles have to be addressed.

 

To support its ambitious plan of 450GW by 2030, the government introduced policies that ramped up capacity addition across the country. Now although India had the necessary technology at par with global standards, the scale of production was (still is) insignificant to meet the domestic demand itself. Additionally, Indian modules were not at par, in some cases, with their global counterparts in terms of quality and price. 

 

This led to the rise of the import driven solar industry in India, where in 2018-19 around 80% of the solar cells and modules were being bought from China and accounted for around $2.16 billion of imports. The easy availability of cheaper products from China, as compared to domestically manufactured products, were some of the reasons for a rise in imports, as solar developers and EPCs always remained under pressure to drive down tariffs in competitive bidding led to an increase in the demand for lowcost raw material.

 

Even today, solar module manufacturing capacity within the country is only about 6-8 GW (India’s solar installed capacity is 36 GW) and solar cells production capacity is approx 3 GW.

 

In this scenario, for the demand to be met significantly from domestically manufactured solar products, India needs to setup a robust manufacturing ecosystem, including for solar cells, wafers, ingots, glass and other solar components used in the entire solar project development life cycle.

 

To promote domestic manufacturing and to provide a level playing field to the manufacturers, government has taken various proactive measures to help the industry grow under its ‘Make in India’ initiative. These measures include imposition of duties such as Anti-dumping, SGD & BCD (announced to be imposed) on the import of modules & cells to curb imports, enforcement of Domestic Content Requirement in tenders & auctions and implementing an Approved List of Module Manufacturers (ALMM) with the objective of building energy security and improving quality of domestically manufactured solar products. Now, the intent of the government of promoting one segment is causing harm to another segment. Such policy barriers, uncertainties and disparities in a growing sector adversely impacts the growth of the sector.

 

Imposition of these tariff and non-tariff barriers has ultimately created traction to manufacture cells and modules indigenously with the strategy aimed at pushing India’s attempts to become an integral part of global supply chains, as firms look to shift manufacturing bases out of China following the coronavirus pandemic.