11 of 12 shortlisted for solar eqpt mfg PLI scheme are Chinese

The flagship production-linked incentive (PLI) scheme for solar equipment manufacturing, aimed at reducing import dependence, is likely to see significant Chinese presence in supply chain partnerships and related services.

Of the 12 winners of the PLI scheme for high-efficiency solar photovoltaic modules, 11 have listed supply chain partners and service providers from China, with some mentioning more than 20 Chinese vendors.

Sector leaders Reliance New Energy Solar, Tata Power, ReNew Solar, Waaree Energies, Avaada Electro have listed vendors from China as major suppliers. These firms submitted the list to the Ministry of New and Renewable Energy to facilitate the grant of visas for foreign experts or agencies.

Sector insiders said Indian players depend on China for the factory equipment to set up the required assembly lines. The executives said India’s solar module manufacturing capacity is nascent, and the supply chain needed to set up these capacities is also China-dominated.

Indosol Solar Private Ltd, one of the winners in the first tranche of solar PLI, has listed 94 foreign vendors, of which 65 are from China. Indosol is a special purpose vehicle of Shirdi Sai Electricals, which is a Telangana-based electrical equipment company.

Reliance New Energy, the green energy division of the oil-to-telecom behemoth, has listed all its 20 foreign vendors from China. Adani Mundra, which is the solar manufacturing division of the Adani Group, another first tranche winner, has not submitted any names to the government yet, according to an official document dated January 2024.

From the second tranche of PLI tenders, Tata Power Solar has mentioned seven suppliers/supply chain partners, of which four are of Chinese origin, two from Germany, and one from Singapore. Gurugram-based ReNew has listed eight suppliers/supply chain partners, with six of them with Chinese origin in the submission dated January. Waaree Energies, which is the country’s oldest solar equipment manufacturer, has 17 suppliers/supply chain partners for its PLI scheme project, all of them with Chinese origin.

Avaada Electro, which is part of the Vineet Mittal-promoted Avaada Group, has submitted it has 30 foreign supply chain partners, of which 24 are of Chinese origin.

Business Standard has reviewed a copy of all the submissions. An email query sent to Reliance Industries, Tata Power, ReNew, and Avaada Group on Monday remained unanswered. Waaree declined to respond, and Indosol could not be reached. Among other companies, VSL Solar, part of Kolkata-based Vikram Solar group, AMPIN Solar, Grew Energy have more than 90 per cent of their vendors from China.

The PLI scheme for solar aims at building a domestic supply chain of equipment for the solar power sector and reducing import dependency. Close to 70 per cent of the country’s solar power generation capacity is built on China-made solar equipment. Despite several tariff barriers on Chinese solar imports by India over the last decade, the domestic market has not seen a significant upswing.

In a PLI review meeting in November, headed by the Cabinet Secretary, one of the sticking points discussed by the agencies/departments overseeing the schemes was the issuance of visas to experts and vendors partnered by the PLI winners. The most pressing visa issue is for those from China.

“A streamlined process for the grant of visas for experts/technicians from land border countries may be put in place. It was noted that visa-related difficulties are being faced by component manufacturers critical for the implementation of PLI schemes and also in other production activities/projects,” said the minutes of the meeting held in November.

A report by ICRA in November 2023 said the PLI scheme was expected to enable the addition of 48 Gw integrated module manufacturing units with an investment of over Rs 1 trillion. In comparison to China, ICRA said the manufacturing capacity in India was relatively low and was largely restricted to the last manufacturing stage. “As a result, the solar OEMs in India remain dependent on sourcing wafers and cells through imports. The PLI scheme is expected to change this, with integrated module units expected to come up in India over the next two-three years,” ICRA said. Business Standard