India's solar module manufacturing set to hit 60 GW by 2025: ICRA Report

The domestic solar photovoltaic (PV) module manufacturing capacity in India is anticipated to surge to a significant 60 gigawatts (GW) by 2025, as per the latest projections by ICRA, a leading rating agency.

ICRA’s report indicates 62 per cent growth in module manufacturing capacity from the current level of 37 GW, reaching the 60 GW mark within the next four years. This growth is primarily attributed to the capacity awarded under the production-linked incentive (PLI) scheme, bolstered by strong policy support and the escalating demand from domestic solar power installations.

The solar PV module supply chain is presently dominated by China, accounting for over 80 per cent of the manufacturing capacity across various stages from polysilicon, wafer, cell, to modules. In contrast, India's manufacturing capacity in this domain is comparatively low, mostly limited to the final manufacturing stage.

However, with the implementation of the PLI scheme, there's an anticipated transformation in this landscape. The scheme is expected to usher in the establishment of integrated module units in India over the medium term.

The government has sanctioned incentives for setting up a module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW covering the entire spectrum from polysilicon to modules. The required capital expenditure for establishing these integrated module capacities is estimated to surpass Rs 1 lakh crore.

While the projected expansion in manufacturing capacity is significant, the report says that the necessity for domestic solar Original Equipment Manufacturers (OEMs) to capture a portion of the global demand through exports. This becomes crucial in light of the substantial scale-up in manufacturing capacity.

Vikram V, Vice President & Sector Head - Corporate Ratings, ICRA, highlighted the current surge in PV module imports due to the suspension of the Approved List of Models & Manufacturers (ALMM) order until March 2024, combined with a sharp decline in global module prices. However, Vikram remains optimistic about a potential reduction in import dependence due to the anticipated scale-up in domestic manufacturing capacity and the resumption of the ALMM order.

Furthermore, in addition to augmenting module capacity, OEMs are projected to bolster wafer and cell manufacturing capacities, with cell capacity expected to exceed 25 GW by 2025, a substantial rise from the current 6 GW. Nonetheless, the country's reliance on polysilicon imports is expected to persist as these capacities entail longer setup times and larger capital investments.

(With PTI inputs)