India's solar industry may soon get incentives to boost manufacturing and cut Chinese imports

In an attempt to reduce dependence on the Chinese imports, the Central government plans to come out with a fresh solar tender that will provide viability gap funding (VGF) to projects setting up solar wafer and ingot manufacturing facilities.

Silicon wafers and ingots are critical components that go into manufacturing solar cells and modules. However, India does not have manufacturing facilities for these complements that is largely imported from China, even by local solar cell and module makers. China is the biggest maker of these components globally.

"Under the phased manufacturing plan in solar, government may provide the VGF support to developers of these critical solar components. This high technology manufacturing would change the face of domestic equipment market and eliminate dependence on imports," said official sources.

The fresh initiative is to give a boost to local manufacturing as part of the Atmanirbhar Bharat mission. While there is push to set up solar cell and module manufacturing in India, absence of wafer and ingot facilities dented these plans as these critical components will continue to be brought from abroad.

Chinese companies dominate the Indian solar components market, supplying about 80 per cent of solar cells and modules used here, given their competitive pricing. India imported $2.16 billion worth of solar photovoltaic (PV) cells, panels, and modules in 2018-19.

As part of an accelerated manufacturing plan that is being operationalised in India, it is incentivising setting up of solar cell manufacturing capacity of 4000 MW that would allow project developers to restrict import of this product completely.

Additionally, 3000 MW of fresh solar cell capacity is being added under manufacturing linked bids for solar projects. This would incentivise power project developers planning manufacturing in India.

The current capacity of solar cell manufacturing in India is about 2,500 MW. This is proposed to rise over three times in coming years.

In case of solar modules as well, 7000 MW of capacity is being added in addition to existing capacity.