India's Solar Panel Imports Rise Despite Self-Sufficiency — Here's Why
Here are the key factors behind the 2.84 times rise imports of solar cells and panels in last fiscal.
India's import of solar cells and panels rose in fiscal 2024, despite the government claiming that the country is self-sufficient in solar panel production.
The country imported solar cells and panels worth more than Rs 51,460 crore in the financial year 2024. This was 2.84 times higher than the value recorded in the previous fiscal.
A key component for making solar panels and modules, and lower landed costs are among the factors behind this anomaly.
Solar Cells Verus Modules
A solar module or solar panel is made by a collection of interconnected solar cells electrically wired together in a single frame, making solar cells a key component to make solar panels.
India's self-sufficiency claim refers to its ability to produce enough solar panels to meet the country's demand. As of February 2024, India's solar PV module manufacturing capacity stood at 50 gigawatts, but its solar cell manufacturing capacity stood at only 6 gigawatts, according to a release by the Press Information Bureau.
The lack of backward integration and limited capacity for cell manufacturing keeps the module manufacturers dependent on imports for sourcing solar PV cells, according to ICRA Research.
Lower Prices
In June 2024, solar cell prices plummeted to 4 cents per watt, a drastic drop from their peak of 16-17 cents per watt in December 2022. Similarly, prices for mono PERC modules, known for their high efficiency, hit a historic low of 10-11 cents per watt, down from 27-28 cents per watt in the fourth quarter of fiscal 2022.
ICRA Research attributes this price decline to improved supplies throughout the value chain, US restrictions on Chinese imports, and reduced demand from Europe. This development bodes well for Indian solar developers with projects tendered in the past two years that have yet to commence, the research firm said.
Lower Landed Costs
The second key reason for the higher imports are the lower cell and module prices leading to lower import costs of solar panels, when compared to domestic original equipment manufacturers.
The landed import costs (inclusive of all costs or final cost for the modules) are lower by 4 cents per watt, when compared to the domestic price, according to ICRA. This difference makes a significant impact on the choices of solar developers as lower procurement costs are the preference.
