Free trade agreements (FTAs) have resulted in increasing duty-free imports from Southeast Asian countries like Vietnam. India has been heavily dependent on imported solar PV modules. The small and medium scale (SME) indigenous solar panel manufacturers, comprising half of India’s solar PV manufacturing capacity, receive tough competition from imported modules. Easier lending norms would ensure capital flow to the SME solar manufacturers, who have the potential to catalyse thousands of additional jobs in the sector.
To encourage domestic manufacturers, 39.6 GW of manufacturing capacity was allocated in Tranche-II of the production-linked incentive (PLI) scheme in March 2023. On the other hand, India's ongoing FTAs are resulting in rising imports and outflow of foreign exchange. In the current puzzle, apart from easing the lending norms, what other measures could the government take to ensure the prosperity of the domestic SME module manufacturers?