India’s Reliance on Imports May Threaten its Renewable Energy Goals

India's ambitious target of achieving 500 GW of renewable energy capacity by 2030 could lead to the country's solar equipment imports reaching approximately $30 billion, primarily due to heavy dependence on Chinese products, according to the Global Trade Research Initiative (GTRI). The think tank highlighted the importance of India establishing its own solar manufacturing sector, focusing on key areas like polysilicon and wafer production. Without this, India could still experience high import costs, putting its renewable energy goals at risk.

In the year 2023-24, India increased its solar capacity by 15 GW, reaching a total of 90.8 GW by September 2024, a notable rise from the 2.8 GW in 2014. Despite that, GTRI predicts that in order to reach the goal of 500 GW by 2030, annual installations must increase to 65–70 GW, with solar power expected to make up more than 80 percent of this capacity.

“This target seems ambitious, particularly given India’s reliance on imports, which could push solar import to $30 billion annually,” GTRI said.

The Economic Survey 2023-24 pointed out that China has seen a growth in its manufacturing trade surplus since 2019 because of a decrease in local demand and a rise in industrial capacity. According to the survey, the variation in China's domestic supply and demand has increased in recent years, leading Chinese businesses to explore new markets abroad. During 2023–24, India bought solar products for a total of $7 billion, and 62.6 percent came from China. The strong presence of China in worldwide solar manufacturing, with 97 per cent of polysilicon production and 80 per cent of solar modules under its control, creates difficulties for other nations in the competition.

Despite India's efforts to enhance local manufacturing through initiatives like the PLI scheme, GTRI founder Ajay Srivastava said that the reliance on imported inputs has hindered their effectiveness. The report pointed out that India's solar manufacturing industry is still in the early stages, relying mostly on imported, pre-made solar modules for most projects. In the last financial year, India imported $4.4 billion worth of these modules, as well as solar cells and other essential parts like inverters and cables.

"Nearly 90 per cent of India’s solar manufacturing involves assembling modules from imported cells, with only 15 per cent local value addition,” the GTRI report said.

GTRI suggests various measures to enhance domestic manufacturing, such as improving upstream solar production, explaining the scope of the PIL scheme and developing a skilled workforce. Srivastava also proposed that India should partner with nations such as the US, the EU, and Japan to set up large-scale solar manufacturing plants.