Association for Public Policy Analysis & Management

This paper analyzes the labor impacts of India’s ambitious solar deployment policy, and specifically examines the avenues and challenges to employment generation in solar manufacturing in India.

In the past few years, India’s renewable energy (RE) policies have drawn enormous attention and optimism across the world. The overall target is to add 175 GW of RE by 2022, that includes 100 GW of solar capacity. Indian government has coupled these ambitious targets with domestic manufacturing programs such as ‘Make in India’ to steer job growth through renewable industries. However, even though job creation has been one of the motivating factors for aggressive RE policies in India, data on current levels of employment in the sector remain scarce, and scattered. Furthermore, given India’s heavy reliance on coal for power generation currently, it is also important to evaluate the job loss that is likely to happen in coal sector as India starts shifting towards cleaner sources of energy. In this paper, I address both these gaps as I explore the question: (how) can solar industry steer employment generation in India?

I answer this question by following a mixed-methods approach. Given the absence of official employment figures in RE industries, I first construct a dataset for the current levels of employment using primary and secondary sources such as industry surveys, and Government of India reports. Then I perform Input-Output analyses to estimate the economy-wide employment generation, both direct as well as indirect, under different decarbonization scenarios till 2030. I use World Input Output Database (WIOD), and Government of India’s Ministry of Statistics and Program Implementation’s (MOSPI) Input-Output tables for the analyses. My results suggest that the employment impacts of solar deployment in India are likely to be modest and limited to contractual jobs in downstream sectors of construction and installation. Jobs in manufacturing would remain scarce given India’s heavy import dependence for cheap solar modules. Potential job loss in coal sector would further reduce the net positive impact of solar industry on employment generation, though coal job loss is less likely to happen in the near future as India does not plan to shut its coal thermal power plants in the next decade.

I then explore the potential and challenges to creating new green jobs in India by expanding solar PV manufacturing. India’s employment potential is especially limited in solar manufacturing because it imports more than 80% of the solar panels. However, solar manufacturing industry in India is not globally competitive, and use of more-expensive locally-produced panels will slow down solar deployment in India. I conduct interviews with industry & policy experts, and government officials to understand whether and how can seemingly divergent domestic goals of decarbonization, employment generation, and energy security be achieved with a solar manufacturing policy. The results of these interviews can inform policies and research in context of other developing countries such as India that face the twin challenges of meeting their development targets, and decarbonization goals under the Paris Agreement.