India’s export of solar photovoltaic (PV) products soared 23 times between FY22 and FY24, when it touched $2 billion, and continues to grow at a scorching pace. The trend signals that the country is poised to be a net exporter of these products, even as it is eyeing big targets for solar capacity addition, and these products are meant to be in great demand locally.
According to industry sources, apart from the availability of a booming market in the US, robust growth in exports of PV items can also be attributed to temporary stagnation in domestic demand for PV modules owing to the delay in the implementation of the Approved List of Models and Manufacturers for the local markets. Most PV manufacturers have ended up looking to sell their products at a high premium abroad.
The US has emerged as a key market for Indian solar PV products accounting for 97% of shipments in both FY23 and FY24.
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But the short-term focus on exports while leaving the domestic market high and dry, also may have some benefits, according to analysts. “Focussing on the US market can benefit the Indian PV manufacturing ecosystem. The exposure to the US market will enable Indian PV manufacturers to attain economies of scale, ultimately enhancing their product quality and competitiveness,” said Vibhuti Garg, Director-South Asia, Institute for Energy Economics and Financial Analysis (IEEFA).
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However, she cautioned that to truly establish India as a global manufacturing hub for solar products in the long run, Indian PV manufacturers must focus on upstream backward integration. This will help India maintain its foothold in existing markets while unlocking untapped markets like Europe, Africa, Latin America, etc,” she said. With the US’s move to withdraw duty-free access to PV products from Southeast Asian countries, and even impose countervailing duties on them, India can potentially replace these countries to become the leading PV exporting country to the US, the Garg added.
The increasing demand for Indian PV products abroad and the attractive incentive structure under the Inflation Reduction Act (IRA) have also pushed many Indian manufacturers to establish manufacturing facilities overseas,
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