Solar sector alert: Red Sea turmoil propels module prices, India seeks self-reliance in production

New Delhi: The ongoincr Red Sea shipping crisis has emerged as a significant bottleneck for the global solar energy supply chain, sending ripples through India's solar sector. The disruption has led to an alarming 20% hike in the prices of solar modules shipped from Asia to Europe, spotlighting the vulnerabilities of India's reliance on imports for its solar projects. This comes at a time when the country is aggressively pushing towards meeting its renewable energy targets. "The impact of the Red Sea shipping crisis has cascaded to all countries including India, primarily resulting in increased freight cost leading to a short-term increase in the landed cost of imported modules," said Anujesh Dwivedi, Partner, Deloitte India. Dwivedi further noted, "For India, the crisis has primarily resulted in increased freight cost leading to a short-term increase in the landed cost of imported modules. The impact is expected to be short term till the crisis persists." To mitigate the repercussions of such global disruptions and diminish its dependency on long-distance shipping routes for solar modules, India is taking significant steps towards enhancing its manufacturing capabilities. "Higher shipping costs were witnessed during the COVID crisis period as well and due to the prevailing geo-political situation (especially in the post-covid era) a large number of countries including India have already been actively working towards reducing exposure/dependence on imports by promoting domestic manufacturing of solar modules," explained Dwivedi. He highlighted, "The Govt. of India is also working with other countries for developing dedicated corridors to enhance trade with India."