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Business News/ News / India/  After modules, govt now considering non-tariff barrier for solar cell imports
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After modules, govt now considering non-tariff barrier for solar cell imports

The government is contemplating including cells in the ALMM to reduce reliance on Chinese supplies and develop the indigenous solar supply chain. This move aims to increase domestic production, meet local demand, and implement quality control measures.

High import duty on modules and cells, the ALMM, PLI schemes for the solar module ecosystem are steps taken in this direction over the past few years.Premium
High import duty on modules and cells, the ALMM, PLI schemes for the solar module ecosystem are steps taken in this direction over the past few years.

New Delhi: After reimposing the ‘approved list of models and manufacturers (ALMM)’ for solar modules starting 1 April, the Centre is now considering a similar norm for cells used for making modules in order to curb Chinese imports and promote Indian-made cells, said two people aware of the development.

ALMM is a list featuring the names of the models and manufacturers of solar modules which are allowed to supply to government-supported projects.

Talks on the matter are in an initial stage, with the government likely to firm up a roadmap that would look at ramping up domestic production in order to meet the local demand. This is would seek to do by introducing quality control norms through non-tariff barriers – that is by bringing in cells under the ambit of ALMM. This would be done only after the domestic supply chain seems adequate.

"There is a consideration for bringing in cells under ALMM going ahead. However, the move needs to be planned on the basis of availability of cells. A roadmap will have to be given to the industry. If there is no adequate domestic capacity to meet the demand, the objective will not be fulfilled," said one of the two people mentioned above.

The other person added that, given the talks are in an initial stage, the government would take time to work out the modalities for bringing cells under ALMM norms and would wait for the capacity to be added.

"Apart from companies taking up manufacturing of cells along with modules voluntarily, the two tranches of the production linked incentive (PLI) scheme would also add to the capacities," the second person said, adding that integrated capacities, including both cells and modules under the first tranche of the PLI are likely to come up by November this year.

The move is in line with steps to lower the reliance on Chinese supplies and develop the indigenous solar supply chain. High import duty on modules and cells, the ALMM, and PLI schemes for the solar module ecosystem are all steps taken in this direction over the past few years.

ALMM was kept in abeyance for the recently ended FY24 in view of low supplies of modules and its potential impact on solar capacity addition. So far, only Indian-made modules and companies manufacturing in India feature in the list that introduced as a non-tariff barrier in 2021, aimed at promoting domestic module manufacturing. 

Goods made by firms on the ALMM list can be sourced for government-supported schemes and projects where electricity discoms procure electricity. Manufacturers and solar modules are approved by the Bureau of Indian Standards (BIS) and the ministry of new and renewable energy.

If cells are brought under the ambit of ALMM, they would also be subject to scrutiny for their use in modules meant for government-backed projects.

Although India has somewhat developed its module manufacturing capacity and currently has about 37 GW module capacity listed in ALMM, the country has only about 6 GW local capacity for cells.

In order to meet a 500 GW non-fossil capacity by 2030 – with 292 GW of it in solar power -- India would require 25-50 GW of annual cell and module manufacturing capacity.

According to data from ICRA, during the April-February period of FY24, India's cell and module imports stood at 41,920 crore, way above 18,093 crore in FY23.

Jatin Arya, Associate Director, CareEdge said: “The current cell manufacturing capacity in the country is low in quantum as against the domestic consumption requirement. If the government plans to bring cells under the ALMM, it would take at least another 24 to 30 months to have the requisite domestic capacity to meet the demand and bring in such a norm."

"Further equipment for manufacturing these cells are largely imported from China. Given India’s push for localization of the solar supply chain, there is a possibility of China putting hindrances in sharing cell manufacturing technology and supplying equipment required to manufacture cells. This could act as a barrier for India in its journey of backward integration of solar supply chain," he added.

Queries sent to the union ministry of new and renewable energy remained unanswered till press time.

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Published: 15 Apr 2024, 08:00 AM IST
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