India's Growing Solar Exports Could Threaten Domestic Supply
If one accounts for the exports, the supply of solar modules from domestic producers would fall short of the annual requirement in fiscal 2025 and 2026.
India has traditionally been one of the largest importers of solar modules, but has also seen its exports rise 23 times between fiscal 2022 and 2024.
Due to higher profitability potential, Indian solar module manufacturers have been focusing more on export markets. While this is positive for the country's current account, this growing export market might harm domestic requirements, as per the Institute for Energy Economics and Financial Analysis.
Indian Solar Module Exports And Imports
India's solar module and cell exports have grown at a 319.3% three year compounded annual growth rate over FY22-24. In fiscal 2024, the country exported solar modules and cells worth $1,969 million, marking a 90.6% annual growth.
Simultaneously, in fiscal 2024, the country imported 26 GW of solar modules. As per Mercom India Research, India imported solar modules and cells totaling $6,200 million in fiscal 2024, marking a 179% year-on-year increase.
Domestic Supply Concerns
The growing exports mentioned above could have implications to India's growing solar demand. According to the Institute for Energy Economics and Financial Analysis, annual solar module production by Indian companies in fiscals 2025 and 2026 will likely be around 28 GW and 35 GW, respectively.
However, after accounting for the exports, the resultant supply by Indian module makers in the next two years will be only 21 GW and 25 GW, respectively. This is less than the annual requirement of around 30 GW to meet India’s 2030 solar energy target.
Why Are Exports And Imports Both Rising?
One of the major reasons why solar panel makers export their products rather than providing for domestic supply is cost. Despite higher logistics expenses, domestic manufacturers can achieve around 40-60% higher profit margins on solar PV module sales in countries like the US, compared to India, as per the Institute for Energy Economics and Financial Analysis.
Based on industry interviews that JMK Research conducted with manufacturers, TOPCon solar module prices in the US stand at 26-30 cents per watt-peak compared to 15-18 per watt peak in India. Furthermore, the prices in India do not compete with Chinese import prices.
Other factors that contributed to higher exports include delayed implementation of the Approved List of Models and Manufacturers to April 2024, and countries adopting a 'China plus one' strategy to minimise their import reliance on the country.
