India’s rapid shift to a cleaner energy mix, which has attracted interest from global investors, has a weak link that increases the country’s import-dependence in the energy sector—inadequate local manufacturing of solar photovoltaic modules and other equipment. While the country is expected to reach close to 19 gigawatts (GW) of total solar power generation capacity this fiscal year—a key milestone on the path towards the targeted 100GW by 2022—domestic manufacturing capacity is roughly 1,300 megawatts (MW) of solar cells and 2,700MW of panels every year. A panel comprises many photovoltaic cells. Industry experts said that having self-sufficiency in solar panel manufacturing should be an important element of the Make in India initiative as it can have an impact on energy security as far as renewable sources are concerned. According to a July 2014 report from consultancy firm KPMG, a sustainable domestic solar equipment manufacturing industry can save $42 billion in equipment imports by 2030 and create 50,000 direct jobs and at least 125,000 indirect jobs in the next five years, besides providing equipment supply security. Power minister Piyush Goyal promised on 7 March that the government was working on a policy to encourage large-scale domestic manufacturing of solar power equipment. The policy will cover fiscal as well as other measures meant to promote the sector. “The installed capacity of photovoltaic cell production is very limited and is nowhere close to the ambitious implementation targets. India needs a lot of fresh investments in the manufacturing sector to make it self-reliant and at par with the global industry,” said Naresh Mansukhani, country head (solar), Orange Renewable Power Pvt. Ltd. With its growing requirements, India is expected to see big investments in the manufacturing sector, said Mansukhani, adding that given a choice, the current preference is imports. Orange Renewable has 100MW of solar power capacity under development in Maharashtra. Domestic producers of solar equipment contend that they match imports from Europe in quality. Hitesh Doshi, chairman and managing director of Waaree Energies Ltd, said that leading domestic players are already at par with their counterparts in developed countries in quality and pricing of photovoltaic modules. “A major chunk of solar-related goods coming from China are below par in quality as compared to products from domestic manufactures. Imports of solar photovoltaic modules from countries like Japan and Europe are not very prevalent, owing to their higher pricing, while their quality is as good as that of Indian counterparts,” said Doshi. The solar industry looks very prosperous, both for power generation and for manufacturing components, added Doshi. Solar modules made in India also have an excellent export potential, he said. Waaree Energies has an annual production capacity of 500MW and is working towards scaling it up to 1,000MW by the end of this year, said Doshi. Santosh Kamath, partner and head of renewables at KPMG in India said he did not see any particular difference in terms of quality or longevity between solar modules produced by domestic producers and those by international manufacturers, without getting into player-specific factors. “In terms of price, it appears Indian producers are a little higher than the Chinese as witnessed by price differentials observed in domestically mandated procurement and open procurement. However, it is not clear whether this difference is a fundamental efficiency issue or driven by other factors such as policy support available in other geographies,” said Kamath, adding that India can develop manufacturing competitiveness in the sector, given the right support from the government. According to Kameswara Rao, leader of energy utilities and mining at PricewaterhouseCoopers in India, domestic manufacturers have underutilized capacity due to higher costs, which in turn limits their ability to invest in process improvement to enhance efficiency. Doshi of Waaree Energies said that export benefits, viability gap funding and production-based incentives were needed to promote the sector.