IAS Gyan

Daily News Analysis

Govt. push sees players lining up to make solar equipment  

13th August, 2020 Environment

Context: Renewable Energy Ministry has received proposals from a range of players for over 10GW (giga watts) of fresh solar equipment manufacturing.



  • The government’s move to shift from the use of short-term ‘safeguard duties’ to protect domestic manufacturers to the imposition of customs duties has induced the industry to “make long-term commitments in terms of investments”.
  • While the government is yet to officially implement the proposed basic customs duty of around 20-25 per cent on solar equipment, 5 percent interest subvention scheme for the domestic manufacturing of ingots, wafers and cells has gone to the Ministry of Finance.
  • Despite a 20GW demand for solar cell manufacturing, India’s current average annual capacity is only around 3GW, with nearly 80 per cent of the inputs and components imported from China.
  • So far, India has implemented only safeguard duties on import of solar equipment from China and Malaysia, which have been extended until July 2021 at a rate of around 15 per cent.
  • Despite initiatives over the last two years to incentivise domestic production – the safeguard duty, domestic content requirement policy and an approved list of models and manufacturers — the expected scale-up did not materialise until now.
  • A key reason is that solar cell manufacturing is a complicated process that is technology and capital intensive. Another reason is that solar cell technology sees upgrades every 8-10 months.
  • Globally, solar wafer and ingot manufacturing is dominated by China, whose companies dominate the Indian solar components market too with their competitive pricing.