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A $160-billion trade opportunity: Can India benefit from China’s solar woes?

The importance of shifting away from fossil fuel-based electricity is not lost on anyone anymore. For India, which needs power to keep growing and feeding its people, the need to make this shift is even more critical. Prime Minister Narendra Modi had articulated this a while ago.

India would generate 450 gigawatts from renewable energy sources by 2030, he said at COP26 in Glasgow in 2021. About 60% of this was expected to come from solar energy. In August 2022, the government said 50% of the country’s electricity requirement would come from non-fossil fuel sources by 2030.

This was an update to the country’s commitment to the UN Framework Convention on Climate Change. It attempts to balance the energy requirements and the necessity to reduce the

reliance on fossil fuels.

While the government’s confidence in building renewable energy capacity is not entirely far-fetched, a lot of effort is required to reach these targets. One way to go forward in this journey is to tap solar energy, which the country can with relative ease. According to the India Brand Equity Foundation (IBEF), the capacity of solar power installed in India has increased by over 18 times from March 2014 to 2021, to 49.3 gigawatts GW.

While this is a remarkable achievement, the country has constantly faced the challenge of importing expensive equipment to generate solar power. The challenges of financing and technological support are difficult to overcome in a hurry. India has not been able to make solar cells and other equipment at scale like China, which has managed to do it and reduced the prices of these equipment. At the same time, China is witnessing a lot of scrutiny in solar manufacturing as the US has accused solar manufacturers there of evading trade tariffs. The solar industry in China is also facing accusations of forced labour and several containers of solar energy products are reportedly stranded at US ports as a result of Uyghur Forced Labour Prevention Act. These troubles compound the pain for China as Covid cases rise again in the country.

These give India an opportunity to grow its capacity. The government had introduced a $195-billion Production Linked Incentive (PLI) Scheme for solar PV manufacturing, to enhance domestic manufacturing capacity. Foreign solar component manufacturers are now looking at India as a potential manufacturing hub for solar components. Last year, Japanese consumer electronics firm

Panasonic Life Solutions announced India would be one of its production bases for domestic sales and select exports.


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