India to Spend $2.6 Billion on Solar to Curb Reliance on China

(Bloomberg) -- India outlined plans to spend an additional 195 billion rupees ($2.6 billion) to boost local manufacturing of solar modules, stepping up a campaign to cut imports from China. 

The country, which has an ambitious plan of generating 280 gigawatts of sun-fired electricity by 2030, imports nearly 80% of the components for solar power from China. New funding adds to an earlier package of 45 billion rupees in incentives, which helped lure companies, including Reliance Industries Ltd. and Adani Group, to the sector. 

India's dependence on Chinese imports extends across the entire energy sector and the nation has taken a raft of measures to curb imports from its neighbor as relations have soured over fears of cyber-attacks, border conflicts and pandemic-related supply disruptions. Power minister Raj Kumar Singh last week raised new concerns when discussing plans for local manufacturing of smart meters. The nation doesn't want to “buy anything from our northern neighbor,” he said. 

Adding production in clean energy technologies “opens up huge employment opportunities and will take the country on a sustainable development path,” Finance Minister Nirmala Sitharaman said Tuesday while presenting the nation's budget. 

The new policy will help boost India's self-sufficiency in solar modules and open up export opportunities, according to credit assessor Crisil Ltd. Incentives will potentially help create 30 to 35 gigawatts of solar module capacity and as much as 30 gigawatts of cell capacity by 2024, Crisil said in a tweet.

Along with more aid for solar module makers, India will encourage the use of biomass pellets as fuel in thermal power plants, Sitharaman said. To promote the blending of ethanol with gasoline, the government will levy an additional excise duty of 2 rupees a liter on unblended fuel starting in October.

The government will also sell green bonds to finance low-carbon infrastructure built by state-run companies, the minister said. 

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