RBI considers priority sector lending for domestic solar panel manufacturing
The Reserve Bank of India (RBI) is contemplating the inclusion of solar panel manufacturing in the priority sector lending bracket, as per The Economic Times. This decision comes after several meetings over the past two months, involving bankers, officials from ministries of finance and renewable energy, and other stakeholders. Financing issues confronting solar photovoltaic manufacturers have been discussed. The central bank's decision is expected within the next two to three months.
Solar associations seek PLI scheme revisions
While banks sought priority sector tags for solar panel manufacturers, the renewable energy ministry is urging for changes in the production-linked incentive (PLI) scheme for the solar sector. They believe that the current scheme doesn't adequately address the challenges posed by duty-free imports from Southeast Asian countries under FTAs. The associations have informed the government about their concerns and are hoping for modifications that will better support domestic solar panel manufacturers.
Finance Ministry urges lenders to share their inputs
According to a bank executive, the Finance Ministry has asked lenders to contribute to the development of a policy to ease financing for the sector. "The proposal to include this in priority sector lending and PLI schemes is in line with the discussion held with association members and representatives of the renewable energy ministry," the person claimed.
FTA imports threaten the domestic solar industry
Earlier, banks had sent recommendations to potentially resolve the issue. Meanwhile, domestic solar panel makers raised concerns that duty-free imports from Southeast Asian countries under free trade agreements (FTAs) are negatively affecting them. The imports could be from Chinese manufacturers who have relocated their base to these countries and are exporting from there. In the last three months, solar panel imports from nations with whom India has FTAs have increased by 48%.
Solar imports from China down 80%
According to a report by global energy think tank Ember, solar module imports from China have decreased by nearly 80%, or $2 billion in terms of value, in the first half of 2023. This decline follows the imposition of tariffs as India shifts its focus from imports to building and utilizing domestic manufacturing capacity. Consequently, India's domestic solar module manufacturing capacity has increased.
