India Gets a $10.75 Billion Incentive Plan to Boost Solar, Battery & Auto Manufacturing

The central government has approved a ‘production-linked incentive’ (PLI) plan in ten critical sectors to enhance India’s manufacturing capabilities and exports under the Atmanirbhar Bharat initiative.

The government said in a notification that it would allocate ₹1.45 trillion (~$19.61 billion) for the ten critical sectors over the next five years. Some of these critical sectors include- high-efficiency solar photovoltaic (PV) modules, advanced chemistry cell (ACC) battery, and automobiles and auto components. The government will allocate ₹796.42 billion (~$10.75 billion) for these three sectors in the next five years.

Concerned ministries and departments will implement the PLI plan within the overall prescribed financial limits. The final PLI proposals for individual sectors will be appraised by the expenditure finance committee (EFC) and approved by the Union Cabinet.

Financial Outlay Under Production-Linked Incentive Program for Enhancing India’s Manufacturing Capabilities and Enhancing Exports

The government has been pushing domestic manufacturing with a renewed thrust since the pandemic disrupted the overall supply chains. It recently held a conclave to discuss India’s solar manufacturing plans with willing states.

According to the government, large-scale solar PV imports pose risks to supply-chain resilience and raise strategic security challenges, considering the value chain’s hackable nature. It added that a focused PLI plan for solar PV modules would incentivize domestic and global players to build large-scale solar PV capacity in India and help the country leapfrog in capturing the global value chains for solar PV manufacturing and boost the Atmanirbhar Bharat initiative. To enable this, the government will allocate ₹45 billion (~$605 million).

According to Mercom India Research, India currently has approximately 15.5 GW of solar module manufacturing capacity and around 3.3 GW of solar cell manufacturing capacity (as of June 2020).

ACC battery manufacturing represents one of the largest economic opportunities of the 21st century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy.

The PLI plan for ACC battery will incentivize large domestic and international players to establish a competitive ACC battery set-up in India, and the Union Cabinet will allocate ₹181 billion (~$2.44 billion) for the same.

The automotive industry is another significant economic contributor in India, and the plan will make the automotive industry more competitive and enhance the globalization of the Indian automotive sector. The government will allocate ₹570 billion (~$7.7 billion) for the industry.

Earlier, R.K. Singh had said that power is a sensitive and strategically important sector as all the essential services depend on the power supply. The minister noted that power is a critical sector for the development of the country, and there is a need to reduce dependence on imports and strengthen domestic manufacturing capacity.

On another occasion, Singh said that that the government was planning to develop 3 GW (each) of solar module and cell manufacturing capacity in the country.

In a Mercom webinar held in April, the former secretary of the Ministry of New and Renewable Energy (MNRE), Anand Kumar, had said that the MNRE was planning to promote domestic solar manufacturing capacity. He noted that the ministry not only has plans to develop solar components like cells, modules, ingots, and wafers but to venture into manufacturing ancillary equipment like back sheets, inverters, transformers, among others.