Domestic Content Requirements and India’s Solar Mission

Abstract

Domestic content requirements are widely-used policies that require a specified proportion of a good to be produced within a certain jurisdiction. Applied to solar cells and modules procured through India's national solar power program, this policy is part of India's strategy to build a domestic manufacturing base for solar components and attain energy independence. However, a loophole in the requirement appears to have undermined its effectiveness. This paper uses a conceptual model and a set of probit and logit regressions to determine the effect of India's domestic content requirement for solar cells and modules on domestic manufacturing and technology choice. It finds that the requirement has done much less to spur domestic manufacturing than the Indian government envisioned.