India is considering tightening domestic content requirements for the nation’s solar module makers, who are currently relying on imports of key ingredients such as solar cells.
(Bloomberg) — India is considering tightening domestic content requirements for the nation’s solar module makers, who are currently relying on imports of key ingredients such as solar cells.
The government aims to initially make local manufacturing of solar cells mandatory, Power and Renewable Energy Minister Raj Kumar Singh said at a live-streamed event in New Delhi on Friday. Eventually, Indian companies will need to have fully integrated facilities — from polysilicon to modules, he said.
The process of making solar panels comprises several stages. Polysilicon made from beach sand is converted into ingots, from which thin discs, commonly known as wafers, are prepared. They are used to produce cells, the main part of solar modules. India presently imports most of its cells.
The curbs on cell imports may start in a couple of years, providing domestic companies enough time to build cell-making capabilities, Singh said. The government will push for further localization after the initial round, he added.
India, which was importing as much as 85% of its module needs some years ago, has rapidly added new plants. The push for localization of the key solar power component came after supply disruptions during the pandemic. But India is still heavily dependent on other countries for hardware needed to make the modules. Some firms that make cells need to import its ingredients like wafers.
The government’s policy of discouraging imports by imposing a basic customs duty of 40% on solar modules and 25% on cells in 2022, besides creating an “approved list of models and modules” helped in expanding local module-manufacturing capacity.
As Indian firms started exporting those components for better margins, local solar project developers began facing problems due to the high duty and limited local availability. In response, the government provided a temporary relief on module imports, causing a flood of inbound shipments.
Besides emphasizing on local manufacturing, the government is also putting a thrust on improving efficiency. The power ministry unveiled a plan to introduce efficiency labels for solar panels to help buyers make an informed choice. The labeling program is voluntary for now, but will become mandatory for manufacturers in a couple of years, Singh said.
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