India is on track to become the second-largest producer of solar modules by 2025, surpassing Southeast Asia and catering primarily to the US demand for solar modules, according to a Wood Mackenzie report. This growth is expected to be driven by increased production capacity and investment in the sector.
However, India faces challenges due to high production costs caused by a 25% basic customs duty on imported solar cells. The Indian government is considering lowering the duty on Chinese modules to support export ambitions, as Chinese modules currently have a 40% tax.
On the other hand, China holds over 80% of the global capacity for the solar module supply chain from 2024. The country has a lead in N-type cell technology, accounting for 95% of the announced global expansions in this area. Despite tightened profit margins in the sector due to increased competition and rising raw material costs, vertically integrated manufacturers may still find opportunities for growth.
The US is developing its own photovoltaic manufacturing capabilities under the Inflation Reduction Act but remains dependent on imports due to the absence of domestic production of wafers, cells or glass. This dependency is expected to continue especially once President Biden’s temporary waiver on solar import tariffs expires in mid-2024. Europe’s demand for protective tariffs on Chinese modules due to non-competitive prices also underscores the changing dynamics of the global solar module supply chain.
Overall, these shifts highlight that while there are challenges in