The much-awaited order on exempting ongoing solar projects from the mandatory rule of procuring photovoltaic modules from the Approved List of Models and Manufacturers (ALMM) was issued by the government late on March 10.
With this decision, solar projects are now expected to gain some momentum after a lull of about a year or so. The move is significant as India’s aim is to install 280 gigawatts (GW) solar power capacity by 2030, which means the country needs to add about 27 GW annually. At present, India has an installed solar capacity of 63.89 GW.
“With reference to the Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirements for Compulsory Registration) Order, 2019 and subsequent amendments and clarification thereto, the undersigned is directed to convey that subject Order is hereby held in abeyance for one financial year, i.e. FY 2023-24. Thus Projects commissioned by 31.03.2024 will be exempted from the requirement of procuring Solar PV modules from ALMM,” read the order issued by the ministry of new and renewable energy (MNRE) on March 10.
Contrary to some reports which stated that the government will relax the ALMM mandate for two years, it has allowed the same relaxation for a period of just one year for now.
The ALMM mandate was introduced in 2021 as a non-tariff barrier to boost domestic manufacturing, by approving the list of indigenous models and manufacturers who could participate in the solar development projects bid out by the government. The mandate was later extended to the government’s open-access projects as well. Currently, 83 Indian manufacturers with a combined capacity of 21 GW have been approved under the list. Before the imposition of ALMM, Chinese manufacturers supplied 85 percent of India’s panel demand.
While the intention was to curb the import of solar equipment from China, what actually happened was that the mandate turned out to be a barrier in ongoing projects as the demand for solar modules far exceeded its indigenous supply. Only 10 GW of 500-watt peak panels could be made in the country, against 70 GW of solar capacity installation that were underway. To add to the woes, the government has also imposed a 40 percent basic customs duty on import of modules and 25 percent on import of cells.
This double-barrelled strategy initiated to promote domestic production of solar equipment turned out to be detrimental for the industry with manufacturers either stalling projects under construction and postponing those that were in the pipeline. Besides, projects of at least 25 GW were held up for lack of grandfathering from the government because they were awarded before the ALMM was introduced but the commercial date was set after it.
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