Imports Persist Despite Surge In Exports In India’s Solar Industry

India's transition towards renewable energy, particularly solar power, has been marked by significant growth in recent years. According to data from the Press Information Bureau, the generation of solar power in the country has been steadily increasing at a compounded annual growth rate of 13.9 per cent over the past five years, aligning with policy shifts favouring solar capacity expansion since fiscal year 2018.

However, amidst this growth, a surprising trend has emerged in India's solar industry, as highlighted by data from the Ministry of Commerce and Industry. Despite the domestic solar module manufacturing capacity reaching a level capable of meeting internal demands, India continues to import a considerable quantity of solar modules and panels. This phenomenon occurs concurrently with a notable uptick in India's exports of solar components.

From April 2023 to January 2024, India imported solar photovoltaic cells, assembled as solar modules or panels, worth Rs 28,726.8 crore, marking a significant increase of 3.86 times compared to fiscal year 2023.

The primary source of these imports remains China, despite India's efforts to boost domestic manufacturing through a 25 per cent import duty on Chinese solar cells and modules. However, Chinese producers have reportedly circumvented these duties by routing their exports through Southeast Asian countries such as Cambodia, Malaysia, Thailand, and Vietnam for minor processing, thereby evading anti-dumping duties, as per findings from the US Department of Commerce.

This strategic manoeuvre is evident in India's import data, which indicates a 20% decrease in imports of solar panels from China during the April–January period compared to the previous year. Conversely, imports from Vietnam have surged dramatically, reaching Rs 6,713.2 crore, while imports from Malaysia and Singapore have also witnessed substantial growth.

Moreover, Cambodia, which had no prior exports of solar panels to India, has now entered the market with exports totaling Rs 167.2 crore during the same period.

Despite the persistence of imports, India's solar module and panel exports have experienced exponential growth, recording a three-year compounded annual growth rate of 343 per cent. In the April–January period, exports surged to Rs 12,104.2 crore, showcasing the thriving nature of Indian manufacturers in the global market.

This export boom is largely attributed to increased demand from the United States, which has imposed restrictions on Chinese imports and currently accounts for 98 per cent of India's exported solar modules or panels.

As India's solar industry continues to evolve, the dynamics of imports and exports underscore the complexities and challenges inherent in balancing domestic production with global trade dynamics in the renewable energy sector.