Key Messages

This report—a joint effort of CSTEP and RAND Corporation—examines various state-level policy initiatives for solar PV module manufacturing in India. 10 states were chosen based on parameters such as ease of doing business, existing PV installed capacity, etc.

Based on the incentives and subsidies provided by each state, we developed a financial model to estimate module-manufacturing costs. Considering economies of scale, a 200 MWp facility was chosen. Our analysis indicated that raw materials (70-80%) and working capital (12-15%) comprise the majority of manufacturing costs, and hence incentives on capital investment are not very helpful in lowering the cost of manufacturing.

The following challenges have to be addressed to make module manufacturing cost competitive in India:
1) Non-availability of working capital
2) Higher interest rates (10-12%)
3) Lower demand for domestic modules due to cheaper imported modules

To address these challenges, we make the following recommendations:
1) Assured market demand for new manufacturers  
2) Working capital with lower rates via government-backed loans, such as green bonds
3) Promote domestic content requirement for Public Sector Units’ consumption to ensure module demand and to help in local employment generation


Note: Aside from the CSTEP authors mentioned here, Tobi Oluwatola and Aimee Curtright from RAND Corporation were integral parts of the work.