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. 23/10/2024 12:04 PM
India's Solar Panel Exports Detained by US Over Forced Labor Concerns
In August 2024, the US Customs and Border Protection (CBP) detained nearly $43 million worth of solar panels from India. This action is part of the Uyghur Forced Labour Prevention Act (UFLPA), which bans imports linked to forced labor, specifically from China’s Xinjiang region. The CBP's focus was on polysilicon, a key material used in solar photovoltaic (PV) modules.
China dominates over 80% of the global solar PV supply chain, especially in the Xinjiang region, where concerns over forced labor persist. This scrutiny by the US has given India an opportunity to position itself as an alternative in solar manufacturing. However, Indian firms still heavily rely on Chinese components, which raises concerns under UFLPA.
India’s Ministry of New and Renewable Energy (MNRE) claims self-sufficiency in solar module production, with $1.03 billion in exports in 2022-23. However, the country lacks significant solar cell manufacturing capacity, continuing its dependence on imports, particularly from China. India imported $2.9 billion worth of assembled PV cells in FY2024, underscoring this reliance.
Post-COVID, India accelerated efforts towards renewable energy self-sufficiency. A Production Linked Incentive (PLI) scheme with a Rs 24,000 crore outlay was introduced to boost solar manufacturing. However, domestic companies continue to source essential components from China, making compliance with UFLPA challenging.
In the Union Budget 2024-25, Rs 250 crore was allocated for battery storage, but there was no specific allocation for solar PV modules, raising questions about India’s strategy to reduce dependence on China.
While the US stopped $3 billion worth of electronics under UFLPA in the past two years, India’s recent detentions are a small fraction. However, these seizures mark a significant setback for Indian manufacturers trying to establish themselves as alternatives to Chinese companies.
Prominent Indian solar suppliers like Waaree Technologies and Adani Enterprises were impacted, with Adani confirming that some of its shipments had been detained, but later released after proving UFLPA compliance. Industry experts highlight the risk of increased detentions due to the use of Chinese solar cells in Indian panels.
India’s solar industry faces challenges from the US’s strict enforcement of UFLPA, emphasizing the need for domestic firms to reduce reliance on Chinese components. While India seeks to position itself as a global player in renewable energy, the complexities of international trade and forced labor laws remain significant hurdles.
