Context:

The global energy landscape is undergoing a significant transformation, with countries increasingly turning towards renewable sources like solar power to meet their growing energy demands while mitigating climate change. India, with its ambitious renewable energy targets, particularly in the solar sector, stands at the forefront of this transition. However, despite its aspirations of becoming a solar energy powerhouse, India faces challenges, including heavy reliance on imports for solar modules, predominantly from China. To address this issue and bolster domestic manufacturing, the Ministry of New and Renewable Energy (MNRE) has brought into effect from April 1 an executive order, The Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019. This executive order aims to regulate the solar module manufacturing industry by certifying legitimate manufacturers and incentivizing domestic production.

Understanding The Executive Order:

The Approved Models and Manufacturers of Solar Photovoltaic Modules Order, 2019, mandates manufacturers of solar modules to undergo inspection by the National Institute of Solar Energy to ensure compliance with quality standards. By being listed as an 'approved' manufacturer, companies gain credibility and distinction as authentic producers of solar panels, distinguishing themselves from mere importers or assemblers. This move was prompted by India's reliance on imported solar modules, primarily from China, despite its aspirations of fostering indigenous solar manufacturing capabilities. While India boasts significant solar module manufacturing capacity, it still falls short of meeting domestic demand, especially for crucial components like solar cells and raw materials such as ingots and wafers, which are largely imported.

India's reliance on imports stems from various factors, including the competitive pricing and comparable quality offered by Chinese manufacturers, who dominate the global solar module market. Additionally, geopolitical tensions between India and China have prompted the Indian government to seek alternatives to reduce dependence on Chinese imports. With ambitious renewable energy targets, India aims to source a substantial portion of its electricity from non-fossil fuel sources by 2030, with solar power playing a pivotal role. However, achieving these targets necessitates significant expansion of domestic manufacturing capabilities, which the AMM order seeks to facilitate by promoting local production and restricting imports.

Significance of the Executive Order:

While participation in the Approved Models and Manufacturers (AMM) list is voluntary, it offers several incentives for manufacturers to comply. Companies listed on the AMM can participate in government tenders for flagship solar energy programs, such as the PM Surya Ghar Muft Bijli Yojana and the PM KUSUM scheme, which aim to promote solar rooftop installations and rural electrification, respectively. Moreover, eligibility for government incentives, such as the Production Linked Incentive Scheme, is contingent upon certification as a genuine local manufacturer. These measures aim to spur domestic manufacturing and reduce dependence on imported solar modules, thereby supporting India's renewable energy goals.

The AMM list not only serves as a benchmark for quality and authenticity but also facilitates access to government schemes and incentives, thereby incentivizing manufacturers to invest in domestic production capabilities. However, the impact of the AMM order extends beyond incentivizing manufacturers; it also serves as a strategic tool for reducing reliance on Chinese imports and fostering self-sufficiency in solar manufacturing. By promoting a diverse ecosystem of domestic manufacturers, India aims to mitigate risks associated with geopolitical tensions and global supply chain disruptions, ensuring long-term energy security and sustainability.

Challenges and Opportunities:

Despite the government's efforts to promote domestic manufacturing through the AMM order, challenges persist in achieving self-reliance in solar production. India's solar manufacturing capacity has seen growth in recent years, aided by favorable market conditions and global trends, such as trade disputes between China and other major economies. However, the demand-supply gap for solar modules and components remains significant, with imports continuing to fulfill a substantial portion of India's requirements. Additionally, uncertainties surrounding international trade policies, such as the potential rollback of tariffs by the United States on Chinese imports, pose challenges to India's export prospects and domestic manufacturing ambitions.

While the AMM order has resulted in the certification of numerous manufacturers, including major players in the industry, the absence of a similar list for solar cell manufacturers underscores the continued reliance on imported components. Achieving self-reliance in solar manufacturing requires not only increasing production capacity but also developing capabilities across the entire value chain, from raw material processing to module assembly. Moreover, addressing logistical and infrastructural constraints, such as access to affordable financing and skilled labor, is crucial for sustaining the growth of the domestic solar industry.

Conclusion:

India's efforts to boost domestic manufacturing in the solar sector through initiatives like the Approved Models and Manufacturers of Solar Photovoltaic Modules Order are integral to its renewable energy transition. By incentivizing local production and certifying authentic manufacturers, the government aims to reduce dependence on imports, enhance energy security, and foster economic growth. However, achieving self-reliance in solar manufacturing requires concerted efforts from policymakers, industry stakeholders, and other relevant actors to address challenges and capitalize on emerging opportunities. As India continues on its path towards renewable energy adoption, fostering a robust and sustainable solar manufacturing ecosystem will be critical for achieving its ambitious energy goals and contributing to global efforts to combat climate change.

Source – The Hindu