While a case can be made for continuing the import of solar panels, it does not lend itself to enhancing the country’s basic energy strategy of greater energy independence and security. For this, India would have to invest in creating a competitive module manufacturing sector across the manufacturing chain, from procuring primary resources to the finished product.
Manufacture of solar panels and wind turbines depend on access to rare earth elements (REE), which are a special class of 17 elements or minerals that have extensive use across various industries, including computer, healthcare, defence systems and batteries, apart from clean energy systems. As of now, China has the largest reserves of REE and largely controls the market, sometimes even using it as a strategic tool.4 Interestingly, India too has significant reserves of REE. According to some studies, it has the fourth largest reserves after China, the US and Australia. However, despite commencing rare earth mining activities more than five decades ago, India has not leveraged its advantage. A combination of low-cost Chinese production and lack of R&D, including in extraction techniques and facilities for the separation of individual elements from combined elements, has kept the sector from progressing up the value chain.
Taking cognizance of the challenge, the government has initiated a review of requisite policies to provide a fillip to the sector. In August 2017, the Supreme Court directed the central government to revise the 2008 National Mineral Policy by the end of the year and emphasised the need to encourage scientific mining through proper survey and exploration, as well as the need for adopting better mining practices, advancing R&D, and regulation of unauthorised activities. A new committee has been set up comprising representatives of various ministries and industry – keeping in mind the importance of involving the private sector – as well as representatives of organisations such as Indian Bureau of Mines, Geological Survey of India, Niti Aayog and the Railway Board. One of the main focus areas recommended was improved exploration and scoping of minerals, including rare earth and strategic minerals.5
With policies like electrification of the transport sector and sourcing 40 per cent of power requirements from RE, India needs to ensure that it has the necessary primary resources required to power its energy sector if it is to achieve its goal of energy security. No doubt, finding alternatives to low-priced Chinese REE or developing substitutes will take time and investment. But in the current situation, where China controls the global supply of REE and has even begun stockpiling in preparation for future market demand, efforts to diversify the REE supply chain is critical, both from the economic and security perspectives. India is a latecomer in the sector, but with requisite policy initiatives and implementation, it should join the battle for the soon-to-be-more-competitive renewables market.
Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.
About the author:
*Shebonti Ray Dadwal is Senior Fellow at the Institute for Defence Studies and Analyses, New Delhi.
Notes
- 1. Central Electricity Authority, “All India installed capacity (in MW) of power stations,” March 31, 2017, http://www.cea.nic.in/reports/monthly/installedcapacity/2017/installed_c…
- 2. Sraisth, “Anti-dumping petition has created huge uncertainty for entire Indian solar sector, Bridge to India says,” pv magazine, November 16, 2017, https://www.pv-magazine.com/2017/11/16/anti-dumping-petition-has-created…
- 3. Ameeta P. Duggal, “How would Anti-Dumping Duty impact India’s solar sector?,” ET Energy World, October 24, 2017, https://energy.economictimes.indiatimes.com/energy-speak/how-would-anti-…
- 4. In 2010, China stopped exporting REE to Japan following a dispute over sovereignty of the Senkaku islands in the East China Sea.
- 5. Ikshaku Bezbaroa, “Centre starts reviewing National Mineral Policy following Supreme Court directions,” Down to Earth, September 10, 2017, http://www.downtoearth.org.in/news/centre-starts-reviewing-national-mine…