India-UK FTA a shot in the arm for India’s green energy manufacturing space

Indian manufacturers of renewable energy products are looking to export more solar modules and other green energy equipment as they seek to establish their presence in a global market dominated by Chinese companies.

While a large chunk of India’s $2 billion annual solar module exports goes to the US, shifting trade policies under US President Donald Trump and evolving global demand dynamics have made it imperative for Indian renewable energy companies to explore new markets.

The India-UK FTA that concluded on 6 May promises to unlock major economic gains for India by eliminating tariffs on 99% of Indian exports, covering nearly 100% of the trade value, as the two countries aim to double bilateral trade to $100 billion by 2030.

“This is very positive news for Indian renewable component manufacturers opening a new potential market for us. However, any major gains are contingent on the UK imposing tariff or non-tariff barriers on other countries, the way US has done,” said Vinay Rustagi, senior director, Premier Energies, a solar components manufacturer.

“Moreover, we expect this FTA to work as a template for agreements with other major markets including the EU and the US. Inclusion of similar provisions allowing duty-free Indian green energy components would be very beneficial for India,” he added.

That apart, the UK could emerge as a major market for Indian renewable energy component makers as Britain aims to achieve net zero carbon emission by 2050. 

Currently, nearly 80% of the UK’s energy comes from fossil fuel sources, mainly natural gas and oil. But over the past two decades, the country’s share of low-carbon electricity combined with biofuels for heating purposes has increased from 10% to 23%.

“The (UK’s) clean energy industry will have brand new, unprecedented access to India’s vast procurement market as the country makes the switch to renewable energy and continues to see growing energy demand,” the British government said in a statement on Tuesday.

Also read | Why the India-UK FTA has spooked medical device manufacturers. Hint: China

India’s renewable ambitions

India’s solar module manufacturing capacity is expected to reach 125 GW by the end of this decade from 60 GW now. Waaree Energies Ltd, Adani Solar, Tata Power Solar Systems Ltd, and Vikram Solar are among major Indian exporters of green energy modules. 

India is also a net exporter of wind turbines. 

The country’s current wind turbine and associated component manufacturing capacity is around 18 GW. To meet growing domestic as well as export demand, the government is looking to increase India’s wind power capacity to 100 GW by 2030.

In 2023-24, India exported turbines and related components worth $205 million. Some of the key turbine exporters from India are Vestas Wind Technology India Pvt. Ltd, Senvion India Pvt. Ltd, and Inox Wind Ltd.

In April, the ministry of new and renewable energy issued a draft amendment to the procedure for including wind turbines in the revised list of models and manufacturers. In line with the approved list of models and manufacturers for solar modules, the proposed amendment aims to strengthen India’s wind turbine manufacturing ecosystem by introducing non-tariff barriers that limit imports.

Waaree shares climbed 1.9% to ₹2,632.00 apiece on Wednesday, while Inox Wind rose 2.225% to ₹168.50 per share.

Also read | India-UK FTA: Can exporters seize the opportunity amid tough competition?