Why is it in the News?

Recent government orders on attempts to increase local sourcing of solar modules to support India’s renewables manufacturing ecosystem have been widely reported in the media as ‘import restrictions’.

What is the Approved List of Models and Manufacturers (ALMM) List?

• The Approved List of Models and Manufacturers of Solar Photovoltaic Modules (ALMM) comprises government-approved manufacturers eligible for use in government projects, government-assisted projects, and schemes.
• ALMM aims to boost the domestic solar industry and reduce dependence on imports, particularly from China.

ALMM's Suspension and Reinstatement:

• The ALMM was kept in abeyance for two years to address concerns raised by renewable energy producers with pre-existing government contracts.
• During this period, India's domestic solar industry struggled to compete with cheap Chinese imports.
• To support local manufacturers, the government launched initiatives like the Production Linked Incentive (PLI) scheme under the Atmanirbhar Bharat ('Self-Reliant India') Programme.
• With the PLI scheme enhancing the competitiveness of Indian manufacturers, the ALMM was reinstated in March 2024.
• The government believes that domestic companies can now meet India's solar equipment demand, making the ALMM an essential tool for promoting import substitution and self-reliance in the renewable energy sector.

Solar PV Imports:

• India heavily relies on solar cell and module imports, with China and Vietnam being the primary suppliers.
• Government data reveals that India imported approximately $11.17 billion worth of solar cells and modules over the past five years.
• As of 2023-24, China accounted for 53% of solar cell imports and 63% of solar PV modules.

China's Competitive Edge:

• Several factors contribute to China's dominance in solar PV exports:
  • Cost-effective manufacturing due to lower power costs
  • Government policies prioritizing the solar PV sector
  • Economies of scale and continuous innovation driven by growing domestic demand
• These advantages have made China the most cost-competitive location for producing solar PV components, making it challenging for other countries to match their production capabilities.

What is the Scope of Solar Energy in India?

• India's solar sector holds immense potential, driven by the government's target of achieving 500 GW of installed non-fossil fuel capacity by 2030.
• Moreover, the country's rapid growth in electricity demand, fueled by economic activities and climate adaptation measures, positions solar power as a critical resource.
• Solar energy accounted for one-third of renewable energy generation from April 2023 to February 2024, showcasing its significance in India's energy mix.
• Despite an estimated solar power potential of 748.99 GW, the country has yet to fully exploit this resource.
• To harness this potential, the government is implementing various schemes and programs, paving the way for a sustainable and prosperous solar future.