Centre Re-Imposes Restrictions on Solar Module Imports, To Encourage Local Manufacturing

The government has reinstated restrictions on the import of solar modules to encourage local manufacturing and reduce dependency on imports. The decision, effective immediately, comes after an earlier allowance that permitted imports until March 31, 2024. This shift in policy reflects the government's commitment to supporting domestic capacities in meeting the demands of the solar industry.

The mandate, initially introduced in 2021, requires solar project developers to procure modules from an approved list, serving as a non-tariff barrier to promote domestic manufacturing.

Projections for Domestic Manufacturing Growth

The move comes amidst the projected growth in domestic manufacturing capacities by 2026. According to reports by Mercom India, as of December 2023, India's cumulative solar module manufacturing capacity stood at 64.5GW, while solar cell manufacturing capacity totaled 5.8GW. With the introduction of centre's new policy and increased awareness amongst people India's domestic module manufacturing capacity is anticipated to surpass 150GW, with cell manufacturing capacity expected to reach 75GW by 2026.

Exemptions and Future Outlook

Despite an initial announcement in February 2023 detailing exemptions for certain projects, including those in open access and captive consumption, the latest order on the reinstatement of restrictions did not mention these exemptions. Previously, exemptions were also extended to projects in advanced stages of construction that had opened lines of credit or placed orders before the end of March for modules. However, the latest directive indicates a departure from these exemptions, hinting at a stricter enforcement of the policy.

India Aims for 150GW Module and 75GW Cell Capacity by 2026

The resurgence of restrictions comes amidst optimistic projections for the growth of domestic manufacturing capacities. Reports from Mercom India highlight the surge made in expanding manufacturing infrastructure, paving the way for India to emerge as a global leader in solar technology.

The reinstatement of import restrictions carries implications for the solar industry, particularly for project developers and manufacturers. While it presents opportunities for domestic manufacturers to expand their market share, developers may face challenges in navigating the regulatory landscape and ensuring compliance with the new directives. As India charts its course towards achieving ambitious renewable energy targets, the emphasis on domestic manufacturing is poised to shape the future trajectory of the solar sector.