International Solar Alliance and U.S. Withdrawal
On January 7, the United States announced its withdrawal from 66 international organizations, including the International Solar Alliance (ISA). The ISA, established in 2015, is jointly led by India and France and aims to make solar power more affordable and accessible, particularly in developing countries. While the U.S. joined the ISA in 2021 and contributed about $2.1 million, this represents only 1% of the ISA’s total funding, meaning the financial impact of the U.S. withdrawal is minimal.
Impact on India
- India's solar power initiatives are not heavily reliant on U.S. contributions, and the U.S. exit does not lead to increased solar costs or electricity tariffs in India.
- India's solar module manufacturing capacity stands at approximately 144 gigawatts, with solar cell manufacturing at 25 gigawatts and growing, supported by domestic and global investments.
- India imports a significant amount of Photovoltaic (PV) modules from China, valued at about $1.7 billion in FY25, minimizing reliance on U.S. sources.
Global Implications
- The U.S. withdrawal may affect solar projects in Africa and developing countries, which depend on international cooperation and funding.
- The ISA's role in climate diplomacy for the Global South remains crucial, with India maintaining leadership but with increased responsibility.
Potential Opportunities
- India's growing manufacturing capacity may provide opportunities to supply clean energy equipment to the U.S., especially given supply tensions with China and Mexico.
- Bilateral trade negotiations between India and the U.S. could further influence these opportunities.
In summary, while the U.S. exit from the ISA poses challenges, it serves as a stress test rather than a shock to India's solar sector, which is better prepared than in previous years to handle such developments.
