China has faced significant challenges in its trade sector recently, marked by a sharp decline in both exports and imports, not only in high-tech products like semiconductor devices and computers but also in solar photovoltaic (PV) modules, especially to countries like India. According to a report by the UK-based energy think tank Ember, exports of solar PV modules from China to India have plummeted by over 70% on a yearly basis.
One of the key reasons behind this decline is the introduction of stringent tariff policies and trade barriers imposed by India. The Indian government has implemented measures such as the Production-Linked Incentive Scheme and mandatory approvals for solar manufacturers, aimed at boosting domestic manufacturing. Import duties of 25% on solar cells and 40% on solar modules from China have made importing these components economically unviable, favoring domestic manufacturers instead.
Furthermore, India’s Approved List of Module Manufacturers (ALMM) regulations, although currently on hold, pose an additional hurdle for imports from China. Starting from April 2024, only ALMM-listed modules will be allowed for projects in India, further discouraging imports from Chinese manufacturers.
Despite the decline in solar PV module exports, China remains a dominant force in solar manufacturing. While India is increasing its module production, it still heavily relies on China for solar cells, the essential components for making solar panels. China fulfills a significant portion of the global demand for solar exports, with Europe being the largest importer of solar PV modules from China.
However, countries like the United States and India are taking steps to promote domestic solar manufacturing. In the US, initiatives like the Inflation Reduction Act of 2022 incentivize solar panel manufacturing through tax credits. In India, the solar industry is experiencing a surge in demand, leading to a fivefold growth in solar exports for FY2023 compared to FY2022. Indian stakeholders emphasize the need for self-reliance in the solar supply chain to ensure energy security and reduce dependency on other countries.
Despite these efforts, challenges remain, including a lack of skilled manpower and the need for advanced technology and equipment. India’s solar industry continues to grapple with these issues as it strives to strengthen its domestic manufacturing capabilities.