Prime Minister Narendra Modi’s aggressive push for ‘Make in India’ to bolster domestic manufacturing and make its economy ‘self-reliant’ in the post-pandemic era is a welcome opportunity for India’s solar energy sector. Supply disruptions from China due to coronavirus outbreak and subsequent shortage of solar components and modules have impacted India’s ambitious energy target of achieving 100 GW of solar capacity by 2022.
However, despite making significant progress in solar power generation since 2014 and emerging as world’s third largest solar market, India’s domestic solar equipment manufacturing industry has not been able to capitalise on the opportunity. India imports 80 percent of components from China required for its solar energy production. This raises an important question: does India have the core competence, capital and capacity required to offer domestic manufacturing of solar at a scale that could substitute for its massive imports?
India is energy deficient. According to World Bank, 200 million people in India still lack access to electricity. India’s energy consumption is set to grow 4.2% a year by 2035 -faster among all major economies. Its share of global energy demand is expected to double- from 5% in 2016 to 11% -by 2040. As the dependence on non-fossil fuel sources such as coal and oil is projected to decrease significantly by 2030, low-carbon sources, led by solar photovoltaics (PV) is expected to meet more than half of the new increased energy demand. Moreover, India under its climate action commitment, has pledged to generate 40% of its power from non-fossil sources by 2030. Yet, while India’s annual demand for solar cell manufacturing is 20 GW, its current average annual capacity is just 3 GW. Therefore, any further delay in domestic solar manufacturing and production will have severe ramifications for the country’s energy security and economy.