RBI weighs priority sector lending tag for solar panel manufacturers

The Reserve Bank is toying with the idea of including solar panel manufacturing in the priority sector lending bracket, the Economic Times reported, citing sources familiar with the deliberations.

The report also said that the bank is likely to take a decision in the next two-three months.

Also Read: India slashes solar imports from China as domestic manufacturing thrives

“After discussion with all stakeholders, two recommendations were agreed upon. While banks have sought priority sector tags for solar panel manufacturers, the renewable energy ministry has made a case for considering modifications in the production-linked incentive (PLI) scheme for this sector,” an official said requesting anonymity.

Several meetings have been held involving both the parties, officials from the ministries of finance and renewable energy as well as bankers over the past two months. Discussions have been held on financing issues faced by solar photovoltaic makers.
Recommendations were sent by banks to potentially remedy the issue. Solar associations however have also argued that apart from financing issues, duty-free imports from Southeast Asian countries under free trade agreements, or FTAs, are hurting domestic manufacturers. Earlier, solar associations had argued that exports hadn’t come down as expected.

“We have apprised the government that these could be Chinese manufacturers, who have shifted their base to these countries and are exporting from there,” an association member said.
The solar associations also claimed that in the last 2-3 months, solar imports from countries with whom India has FTAs have increased by 48 percent.

A report by energy think-tank Ember stated that solar module imports from China decreased nearly 80 percent, or by $2 billion in value, in the first half of 2023.