High efficiency solar modules manufactured in India have gained acceptance in various countries in the past couple of years, with the US emerging as a major market.
India’s solar module exports to international markets have grown manifold over the FY23-FY24 , as high-efficiency modules from India have gained acceptance in these markets, CareEdge Ratings said in a report.
“However, the USA remains the most lucrative market for Indian exporters, with over 95 per cent share in FY24, rendering its trade policies paramount for India’s solar equipment trade,” it added.
Export potential
Indian module exports to the US surged to $1.97 billion in FY24. This was facilitated by the fact that domestic manufacturers were obtaining better margins in the US market while demand for domestic modules remained flat in the domestic market because of a delay in the implementation of ALMM-I.
Moreover, India’s cell exports to the US witnessed a jump to $55 million due to growing demand for cells of non-Chinese make. While Uyghur Forced Labour Prevention Act (UFLPA) scrutiny on non-DCR (domestic content requirement) modules and the slowdown in solar installations in the US moderated India’s module exports momentum to around $650 million in 6M-FY25, Indian cell exports remained unphased at levels of around $20 million during 6M-FY24, the ratings agency said.
“However, a strong export order book and progressive decoupling with China keep the prospects bright as Indian players can currently export DCR-compliant modules to the US market at margins nearly 2-3 times of domestic margins,” it added.
Trade barriers
In bid to restrict China from dumping solar modules into its domestic market, the US government has imposed counter-vailing and anti-dumping duties on Chinese modules starting in 2012, followed by retrospective duties on Southeast Asian nations based on anti-trade investigations.
However, the major game-changer has been the sanctions under the UFLPA, which prohibit the import of goods with origins from the Xinjiang region of China due to forced labour issues. The prohibition of modules from China and Southeast Asia, due to deep supply chain linkages to the Xinjiang region, has curtailed US market access for Chinese players, CareEdge explained.
Trade barriers apart, the US government has implemented investment incentives through the Inflation Reduction Act introduced in August 2022, which provides incentives in the form of either up to 30 per cent capital subsidy or a local production-linked subsidy.
Since the implementation of IRA, nearly 35 GW module capacity has been added in the US till October 2024, apart from a module capacity of nearly 41 GW and cell capacity of nearly 43 GW in the pipeline.
In a bid to benefit from these local tax incentives, Indian manufacturers have also announced cell and module capacities mostly through joint ventures.
In its latest move to bridge the gap in its domestic solar supply chain, the US government announced a 25 per cent capital subsidy under Section 48D of the CHIPS Act 2022 for ingot and wafer capacities that begin construction before 2027.