The Union Cabinet chaired by the Indian Prime Minister Narendra Modi has approved the Production Linked Incentive (PLI) program for solar PV modules, reserving an outlay of INR 45 billion ($602 million) for its implementation.
Through this scheme, the government aims to encourage local manufacturers to add integrated solar PV manufacturing plants of 10 GW combined capacity while reducing its dependance on imported solar cells and modules. It estimates the scheme to enable direct investment of around INR 172 billion ($2.3 billion) in solar PV manufacturing projects, which will provide direct employment to about 30,000 and indirect employment to close to 120,000 people.
Under its National Programme on High Efficiency Solar PV (Photovoltaic) Modules, the PLI will be disbursed for 5 years post commissioning of solar PV manufacturing plants to manufacturers who will be selected post a competitive process. The PLI will be provided on sales of high efficiency solar PV modules.
According to the government, manufacturers will be rewarded for higher efficiencies of solar PV modules and also for sourcing their material from the domestic market. Hence, the higher the module efficiency and increased local value addition, the higher the PLI amount.
It also anticipates this manufacturing expansion at national level to create demand for INR 175 billion ($2.34 billion) over 5 years for balance of materials, which refers to all other components of a PV system beyond the panels. The government also sees import substitution of around INR 175 billion ($2.34 billion) annually through these efforts.
Stress will also be laid on research and development (R&D) to achieve higher efficiency in solar PV modules.
India's efforts to encourage domestic solar PV manufacturing become a strategic sector is part of the call for the country to become atmanirbhar or self-reliant. In February 2021, the Ministry of New and Renewable Energy (MNRE) had said India will aim to install 10 GW integrated solar PV manufacturing capacity by Q4/2022-2023 comprising the entire value chain from wafer-ingot to high efficiency modules (see India Plans Integrated PV Manufacturing Of 10 GW).
Expecting friendly regulatory environment in this space, some solar power companies have already made up their minds to expand their capacity, or to enter PV manufacturing. Tata Power Solar recently expanded its combined solar cell and module manufacturing capacity to 1.1 GW (see Tata Power Solar Expands Solar Cell & Module Capacity).
Renewable energy company ReNew Power last year announced plans to enter solar cell manufacturing with an initial annual capacity of 2 GW, with possibility to scale it up (see ReNew Power To Enter Cell Manufacturing).
In December 2020, local business daily Mint claimed as many as 15 domestic and international companies had expressed interest to the Government of India to build a total of 10 GW of wafer, 20 GW of solar cells, and 20 GW of module production capacity in India (see India PV News Snippets: Manufacturing, NVVN, Ayana, HCCB).
India tries to protect the nascent solar manufacturing industry with trade barriers. In early March, the Ministry of New and Renewable Energy (MNRE) confirmed India is imposing Basic Customs Duty (BCD) on imported solar cells and modules with effect from April 1, 2022. For solar cells with the code 85414011, the BCD level has been fixed at 25%; and for solar modules with code 85414012 it has been set at 40% (see India Imposes Basic Customs Duty On Cells & Modules).
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