Explained: How the new solar policy benefits local economies

India’s new policy discouraging the import of solar panels is set to give a boost to local economies of smaller states. From April 1—the new financial year—Approved Models and Manufacturers of Solar Photovoltaic Modules (Requirement for Compulsory Registration) Order, 2019, which requires solar panel makers to submit to an inspection of their manufacturing facilities by the National Institute of Solar Energy, came into effect.

If approved, the ‘certified’ facilities will legitimise solar panel manufacturers, who can participate effectively in government tenders, thereby reducing dependency on imports.

While one of the government’s prime goals is to nationally reduce reliance on imported solar panels, especially from China, to reach its net zero targets by 2030, the move will also serve the twin objectives of livelihood generation and environment sustainability at the local level, especially in smaller states.

“The implementation of the new policy with respect to imports will indeed have a positive impact on job creation and the economies, specifically of smaller states,” said Mashhood Alam, senior research associate, BRCG Research and Development Foundation. “With the government planning to realise its net zero targets, solar energy will play an important role. The demand for solar panels is increasing by the day. Indigenising manufacturing will benefit local suppliers and businesses and will create more jobs.”

Alam noted that the move will also benefit states in achieving their green targets more effectively and timely.

The launch of a 250 MW capacity (expandable up to 1 GW) state-of-the-art solar panel manufacturing factory in Rudrapur in Uttarakhand by Luminous Power Technologies is a case in point.

The plant, launched on March 28 in the presence of their brand ambassador Sachin Tendulkar, was built in record nine months and is spread over 10 acres. The largest solar panel factory in Uttarakhand boasts of being the first in the country to have future module technology, with fully robotic automation capabilities to manufacture high-quality modules. “The setting up of plant has given employment to around 300 people fulfilling an important objective of generating local livelihood, especially in smaller states,” said Preeti Bajaj, managing director and chief executive officer, Luminous Power Technologies. Besides, she said, “The solar panel factory in Rudrapur is a step forward for Luminous towards playing a bigger role in India’s road to net-zero. Our investment in this new manufacturing facility underscores our unwavering dedication to fostering sustainable practices and reducing the carbon footprint.”

The states are also welcoming to such projects. Uttarakhand government came up with its Solar Energy Policy in 2023 that focuses on accelerating solar deployment through utility-scale projects. The state already generates 575 MW solar energy and plans to reach a cumulative capacity of 2,500 MW by December 2027 besides facilitating the complete solarization of 300 villages. As per the policy, the Himalayan state aims to harness the potential of renewables in meeting its jobs, growth and sustainability objectives. “The state will emphasise on clean energy pathways and diversifying its energy mix to further its objectives of preserving natural ecosystems, boosting livelihood prospects, improving the quality of life, and ensuring resilient infrastructure growth,” states the policy. Providing reliable access to solar electricity in remote areas, generating employment opportunities and fostering an entrepreneurial ecosystem in the state are also part of the state’s plan in the solar sector.