In a significant shift in the solar industry landscape, India is anticipated to become the world’s second-largest producer of solar modules by 2025, surpassing Southeast Asia, according to a recent report by Wood Mackenzie. This surge in production is expected to primarily cater to the growing demand in the United States.
The report highlights India’s strategic positioning in the solar module market, a pivotal development as China is projected to maintain over 80% of the global capacity for the solar module supply chain starting in 2024. India’s ascent as a major player in solar module production aligns with its ambitions to boost exports, particularly to the lucrative US market.
Despite these positive prospects, India faces challenges related to high production costs, attributed to a 25% basic customs duty on imported solar cells. To facilitate the export drive, there is speculation that the Indian government might consider reducing the duty on Chinese modules, which currently incur a 40% tax.
In contrast, the United States, under the Inflation Reduction Act, is actively developing its own photovoltaic manufacturing capabilities. However, the report notes that the absence of domestic production of wafers, cells, or glass in the US implies continued dependence on imports, especially once President Biden’s temporary waiver on solar import tariffs expires in mid-2024.
As India gears up to make a mark on the global solar stage, the dynamics of international solar trade are poised for significant shifts, with India’s emergence as a major producer and contributor to meeting the soaring demand for solar modules worldwide.
