China Leads Supplying 62.6% of India's Solar Imports

China continues to be India's leading provider of solar cells and modules, accounting for 62.6 percent of imports valued at $3.89 billion. Vietnam, Malaysia, and Thailand come next, providing smaller proportions of the overall total. India has implemented a 40 percent customs tax on solar modules and a 25 percent tax on solar cells in order to decrease reliance on imports from China. Nonetheless, Vietnam, Malaysia, and Thailand are excluded from these duties through the India-ASEAN Free Trade Agreement as long as they increase the value of their exports by at least 35 per cent.

China currently controls 97% of worldwide polysilicon production and 80% of solar module manufacturing, creating tough competition with their cheaper prices. In 2023, China sold solar modules totaling 227 GW for a value of $39.5 billion, and also exported solar cells reaching 38 GW, with a value of $4.2 billion.

Ajay Srivastava, the founder of GTRI, stated that although PLI schemes are meant to enhance domestic manufacturing, their effectiveness is constrained by India's heavy reliance on imported inputs. The majority of Indian solar projects use imported pre-made modules, since domestic solar manufacturing is still in its infancy. During the previous financial year, India purchased solar modules worth $4.4 billion, solar cells worth $1.9 billion, and key components such as inverters, cables, and junction boxes totaling $1 billion.

The report also mentions that in India, solar manufacturing primarily consists of putting together imported solar cells into modules, with only 15 per cent of materials sourced locally. Only a small number of Indian firms manufacture large-scale solar cells by importing polysilicon or wafers, incorporating 30-40 percent local content, while none create solar cells entirely from silica sand. The report suggests measures to enhance domestic manufacturing, such as putting money into solar production at an earlier stage and reducing dependence on imported polysilicon and solar cells. India needs to develop local manufacturing capacity for aluminum frames, glass, and other essential materials.