New Delhi: India is set to emerge as the second-largest producer of solar modules by 2025, surpassing Southeast Asia, and is expected to cater mainly to the US demand, a Wood Mackenzie report has stated. This comes at a time when China is predicted to hold more than 80% of the global capacity for the solar module supply chain from 2024.
The report indicates that even as India plans to boost its module exports to the profitable US market, it grapples with high production costs due to a 25% basic customs duty on imported solar cells. There is speculation that to support the export ambitions, the Indian government might lower the duty on Chinese modules, which currently incur a 40% tax.
In contrast, the US, under the Inflation Reduction Act, is developing its own photovoltaic manufacturing capabilities. However, the absence of domestic production of wafers, cells, or glass means the US will remain dependent on imports, especially once President Biden’s temporary waiver on solar import tariffs expires in mid-2024.
Meanwhile, Southeast Asia’s solar capacity, mainly driven by Chinese investments, and Europe’s demand for protective tariffs on Chinese modules due to non-competitive prices, underscore the global shifts in the solar module supply chain.
The study further delves into China’s lead in N-type cell technology and the anticipated impact on the market, with China accounting for 95% of the announced global expansions in this area.
The tightening of profit margins in the sector is causing challenges, yet the report suggests that vertically integrated manufacturers may still find opportunities for growth.