Giving domestic solar manufacturers a leg-up

Solar photovoltaic modules are the most important components of a solar power plant and developing a robust local manufacturing capability is key to creating jobs, reducing forex outflows and increasing foreign investment. Domestic solar manufacturers need to be supported, to enable them to compete in the domestic and international markets against the implicit subsidies provided to imported modules. This article focuses on the current market scenario for domestic modules, and recommends a roadmap.

The government’s decision to hold separate auctions for solar projects that will exclusively use domestically manufactured modules (with imported cells), has huge potential to develop local manufacturing. Imported modules are still 8-10 per cent cheaper than domestic modules and creating a separate portfolio for projects based on domestic modules can help reduce that gap. The WTO’s misplaced assessment of the Domestic Content Requirement (DCR) policy created a major roadblock, leading the government to recommend that Central public sector undertakings set up plants using domestically manufactured modules. However, despite encouraging announcements, many projects based on domestic modules have yet to see the light of day.

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