India Set To Become Second Largest Solar Module Producer By 2025

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  • India aims to increase its module exports to the lucrative US market. Still, it faces a challenge in the form of elevated production expenses, primarily attributed to a 25% essential customs duty imposed on imported solar cells. 
  • There is ongoing speculation that to facilitate its export aspirations, the Indian government may consider reducing the duty on Chinese modules, which are subject to a 40% tax.

India is poised to become the world’s second-largest producer of solar modules by 2025, outpacing Southeast Asia, according to a recent report by Wood Mackenzie. This development is particularly significant as India sets its sights on catering primarily to the ever-profitable US market. However, this ambitious endeavour is not without its hurdles. Despite India’s aspirations to boost its module exports to the US, it grapples with soaring production costs attributed to a 25% essential customs duty on imported solar cells. To facilitate its export ambitions, there is growing speculation that the Indian government may consider reducing the duty imposed on Chinese modules, which currently bear a hefty 40% tax burden.

In stark contrast, the United States is actively developing its photovoltaic manufacturing capabilities, spurred by the Inflation Reduction Act. However, a significant gap in domestic production of essential components such as wafers, cells, and glass means that the US will remain reliant on imports, particularly once President Biden’s temporary waiver on solar import tariffs expires in mid-2024. Simultaneously, Southeast Asia is witnessing a surge in solar capacity, primarily fueled by Chinese investments. Meanwhile, Europe has a growing demand for protective tariffs on Chinese modules due to non-competitive pricing, highlighting the shifting dynamics in the global solar module supply chain.

The report also sheds light on China’s dominant position in N-type cell technology, accounting for 95% of announced global expansions in this sector. Despite the tightening profit margins in the solar module industry, the report suggests that vertically integrated manufacturers may still identify growth opportunities. As India positions itself to seize the mantle of the world’s second-largest solar module producer, it must navigate the complex landscape of import duties and international competition. Meanwhile, global shifts in the solar industry supply chain, coupled with technological advancements, promise to reshape the market dynamics in the years ahead.

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