• India heavily relies on imports to fulfil its demand for solar cells and modules, with China and Vietnam emerging as major suppliers.
• According to a statement by the Minister for New and Renewable Energy in Parliament in February of the previous year, India imported approximately $11.17 billion worth of solar cells and modules over the past five years. This accounted for 0.4% of India's total exports during the same period.
• Until January of the fiscal year 2023-24, data from the Ministry of Commerce's Import-Export department indicated that China constituted 53% of India's solar cell imports and 63% of solar PV module imports.
• Rating agency ICRA estimates that China dominates over 80% of the manufacturing capacity across polysilicon, wafers, cells and modules.
• ICRA noted in its November 2023 report that India's manufacturing capacity is relatively low, primarily concentrated in the final manufacturing stage.
• ICRA predicts that the Production Linked Incentive (PLI) scheme will catalyze change, expecting integrated module units to emerge in India over the next 2-3 years. This shift is anticipated to diversify India's manufacturing capabilities and reduce reliance on imports, particularly from China.

• India initiated efforts to address its overdependence on solar PV imports with the notification of the Approved List of Models and Manufacturers (ALMM) order in January 2019. This move aimed to regulate the use of solar PV modules in government projects and promote domestic manufacturing.
• The issue of import dependence gained prominence amid severe global supply chain disruptions caused by the COVID-19 pandemic.
• In response, the ₹19,500 crore Production Linked Incentive (PLI) scheme in the Union Budget of 2022-23. This scheme was designed to boost domestic manufacturing across the entire solar supply chain, ranging from polysilicon to solar modules.
• In addition to the PLI scheme, the government introduced steep customs duties to further incentivize domestic manufacturing.
• A 40% customs duty was imposed on PV modules, along with a 25% duty on PV cells. However, these duties were later halved in response to slowed solar capacity additions.
• Developers had been bidding aggressively low tariffs to secure power purchase contracts, which placed cost pressures on projects totalling about 30 GW capacity, largely reliant on imported Chinese equipment.

China's dominance in solar PV exports can be attributed to several key factors:

•  A July 2022 report by the International Energy Agency (IEA) highlights that China offers the most cost-effective environment for manufacturing all components of the solar PV supply chain. This is primarily due to lower electricity prices for the industry. Electricity costs account for a significant portion of production expenses, exceeding 40% for polysilicon and nearly 20% for ingots and wafers.
• The IEA report also emphasizes the role of supportive Chinese government policies. Solar PV has been prioritized as a strategic sector, and government initiatives have fostered continuous innovation throughout the supply chain.
• China's large domestic market creates economies of scale for solar PV manufacturers. This allows them to produce solar panels and components in massive quantities, driving down production costs and making them more competitive globally.

• The Indian government's ambitious target of achieving 500 GW of installed capacity from non-fossil fuels by 2030 serves as the primary catalyst for scaling up solar power in the country.
• Additionally, India is experiencing the fastest rate of growth in electricity demand among major economies until 2026, according to the International Energy Agency (IEA). This growth is fueled by robust economic activity and an increasing consumption of products aimed at mitigating extreme weather events.
• Solar power already contributes significantly to India's renewable energy mix, accounting for approximately one-third of all energy generated from renewables between April of the previous year and February of the current year.
• India possesses an estimated solar power potential of 748.99 GW, according to the Ministry of New and Renewable Energy (MNRE). However, this potential is yet to be fully tapped.
• The government is actively working to harness this untapped potential through various schemes and programs aimed at promoting solar energy adoption across the country.