Since we are heading towards the year’s end with many revolutionary solar projects and clean energy initiatives in India, Indian solar companies might have to pay more for important items like solar panels and cells from December 1st, 2024.

China, a major supplier of these products, has changed its tax rebates. The Chinese government recently reduced export tax rebates on solar products from 13% to 9%. This decision could raise the price of solar modules by 0.02-0.03 yuan per watt for international buyers.

This Chinese move targets to control overproduction, which has led to low prices and financial troubles for its manufacturers. 

However this step might help stabilize their market, but it could increase project costs in India. According to market data from Mercom, over the past year, cheap imports from China have helped reduce the cost of large solar projects in India by 25%,

A report from SBI Market Caps suggests India depends heavily on Chinese imports for solar products like panels, cells, etc. For example, 81% of solar cells and 23% of modules used here come from China. This dependency makes Indian developers and stakeholders sensitive to such policy changes.

“This move could raise costs for the upcoming projects as the ongoing ones would have already been contracted. But this could improve competitiveness, especially for component makers in Europe,” said Raju Kumar, EY India Energy Tax Leader.

Indian companies are now looking for ways to find alternatives from other sources. Firms like Waaree Energies which imports 90 percent of its raw materials, especially solar cells, from countries including China, Vietnam, Malaysia, and Thailand, are building local manufacturing units. 

Waaree is working on a 5.4 GW solar cell facility in Gujarat, which is expected to be ready by 2025.

Experts believe that while Chinese prices may increase slightly, it is impossible to disrupt the market significantly. Large-scale imports from China will be monitored by India’s restrictions, such as ALMM (Approved List of Models and Manufacturers).

At Renewable Affairs we concluded that while this change may slightly raise solar project costs, it also encourages Indian firms to explore local options, which could strengthen the country’s solar manufacturing and take India’s Atmanirbhar Bharat initiative slogan to the next level.

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