GS Paper III

News Excerpt:

Exports of solar modules from India are on the rise, gaining from the China Plus-One strategy, which opened opportunities for prominent Indian players.

About the news:

• In the first half of the FY24, exports surged to Rs 8,307 crore from Rs 1,453 crore year on year (YoY). Major Indian players experienced significant growth, primarily exporting to the USA.

• They anticipate continued export strategies for large manufacturers, with some viewing solar module manufacturing as a means to strengthen green energy supply chains.

• They also plan to invest in developing the green hydrogen system and solar modules.

India’s solar cell manufacturing and export:

• India's photovoltaic (PV) module manufacturing capacity has thrived, surging from approximately 18 GW as of March 2022 to around 38 GW by March 2023.

• Exports of solar cells and modules from India increased to $ 628.38 million in April – July 2023, 1,062 % higher than the $ 54.04 million recorded in 2022.

• The policy measures include the notification of the Approved List of Models & Manufacturers (ALMM) comprising only domestic manufacturers, the imposition of basic customs duty on imported cells and modules, and the Production Linked Incentive(PLI) scheme.

• The production capacity is set to exceed 110 GW by 2026, signifying a fundamental shift in India's renewable energy landscape. 

China-Plus-One Strategy:

The business strategy is to avoid investing only in China and diversify business into other countries or to channel investments into manufacturing in other promising developing economies such as India, Thailand or Vietnam.

Opportunity for India:

• Technology transfer: India can enhance its manufacturing capabilities by transferring technology and foreign investment.

• Cost Advantage: India's competitive wages and vast labour pool give it a cost advantage in manufacturing, making it an attractive alternative to China.

• Diversification of Supply Chains: With multinational corporations seeking to reduce their reliance on China and diversify their supply chains due to rising labour costs and geopolitical tensions, India can benefit from being an alternative destination.

• Sectoral Opportunities: India's strengths in specific sectors such as IT/ITeS, pharmaceuticals, and metals are poised to make it an attractive location for foreign businesses looking to diversify their operations.

Challenges:

• Complex regulatory processes: Bureaucratic red tape and delays in obtaining permits can discourage foreign companies from operating in India.

• Skill Shortages: India faces challenges in providing a skilled workforce with the specific expertise required by industries looking to relocate.

• Global competition: India faces intense global competition to position itself as a preferred alternative.

• Infrastructure Gaps: India's infrastructure lags behind in large-scale manufacturing and supply chain operations. E.g., Turn around time of ships on Indian ports.

Way Forward:

India must address the lingering challenges to leverage the surge in solar module exports and sustain growth. Continued government support, proactive industry collaboration, and targeted policy reforms can strengthen India's position as a preferred manufacturing hub, ensuring sustained success in the evolving global supply chain landscape.

Prelims PYQ

Q. With reference to technologies for solar power production, consider the following statements: (UPSC 2014)

1. ’Photovoltaics’ is a technology that generates electricity by direct conversion of light into electricity, while ‘Solar Thermal’ is a technology that utilizes the Sun’s rays to generate heat which is further used in electricity generation process.

2. Photovoltaics generate Alternating Current (AC), while Solar Thermal generates Direct Current (DC).

3. India has manufacturing base for Solar Thermal technology, but not for Photovoltaics.

Which of the statements given above is / are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1, 2 and 3

(d) None