India and U.S. target $1bn for clean energy manufacturing expansion

The United States and India are deepening their collaboration to enhance their national and economic security by focusing on the global clean energy transition. Both countries are aiming to capitalise on the benefits of this transition, such as job creation, the acceleration of clean energy deployment, and the achievement of global climate targets. Their joint efforts intend to strengthen U.S. and Indian manufacturing capacities, with a special focus on expanding cooperation in third countries, particularly in Africa.

This expanded partnership builds on existing initiatives, such as the Strategic Clean Energy Partnership, established between the U.S. Department of Energy and the Indian government. One significant example is the U.S.-India collaboration on the Payment Security Mechanism, which promotes the deployment of electric buses in India. The partnership seeks to set a global example by establishing a strong techno-industrial base and using innovative manufacturing techniques to bolster clean energy production.

To kick off this effort, both countries are working to unlock USD$1 billion in multilateral financing through the International Bank for Reconstruction and Development (IBRD) to catalyse India’s domestic clean energy supply chain. This funding will support manufacturing expansion in key technology areas such as solar, wind, battery, energy grid systems, and energy-efficient technologies like air conditioners and ceiling fans.

Focus on pilot projects and clean energy components

The United States and India aim to identify near-term investment opportunities in several clean energy sectors, starting with:

• Solar wafer and wafer manufacturing equipment
• Wind turbine nacelle components
• Power transmission line elements including conductors, cabling, and transformers
• Energy storage components such as batteries
• Battery packs for electric vehicles and zero-emission buses
• High-efficiency air conditioners and ceiling fans

These initial efforts will lead to pilot projects, potentially including one that focuses on clean energy deployment in Africa. The U.S. Development Finance Corporation (DFC) is facilitating partnerships in sectors like solar, wind, and batteries to finance the manufacturing of clean energy components. India’s Green Transition Fund, supported by Eversource Capital’s $900 million fund, will further drive renewable energy and electric mobility projects.

Collaboration with African partners

The United States and India also intend to build trilateral relationships with African nations committed to clean energy development. Both countries will focus on solar and battery storage projects, exploring opportunities for electric vehicle deployment in these regions. U.S. and Indian companies, along with local African manufacturers, will collaborate on public-private ventures that can lead to high-potential clean energy solutions.

The DFC and the U.S. Agency for International Development (USAID) are anchoring these efforts, supporting the International Solar Alliance to deploy solar energy systems and EV charging stations near health facilities in Africa.

Policy alignment to strengthen local manufacturing

Both countries recognise the need for sound policies to strengthen demand for locally manufactured clean energy technologies. U.S. legislation, including the Bipartisan Infrastructure Law and Inflation Reduction Act, has aimed to rejuvenate the country’s clean energy manufacturing capacity. India’s Production Linked Incentive Schemes, which have already allocated over $4.5 billion to boost clean energy production, align with this goal.

The roadmap emphasises the need for policies that reduce demand uncertainties and ensure adequate input materials, technological expertise, and financial support. U.S. and Indian agencies will work together to share insights on how to address these challenges.

This roadmap is designed to guide initial cooperation on clean energy projects and will evolve to include long-term objectives, with regular meetings and milestones to be established as part of this expanded partnership.