PLI Program_ Higher the Efficiency of Solar Modules, Higher the Incentive

The Covid-19 pandemic and the subsequent nationwide lockdown capped off a turbulent 2020 for the Indian solar sector. The pandemic affected the solar supply chain and brought the solar industry to a grinding halt, with the ongoing projects being pushed to 2021.

Modules are the most vital component of any solar project, and they contribute to nearly 42% of the projects’ cost.

In the ongoing Mercom India Solar Summit, a session was dedicated to the domestic manufacturing of solar modules. The session titled ‘Solar Modules to Make or Not to Make in India?’ discussed how Indian manufacturers are gearing up to set up new production units backed by the production-linked incentive (PLI) program and other incentives.

The panelists included Amitesh Kumar Sinha, Joint Secretary, MNRE; Avinash Hiranandani, Global CEO and Managing Director, RenewSys India; Ranjit Gupta, CEO of Azure Power; and Daniel Liu, Head of South and Central Asia, Jinko Solar. Priya Sanjay, Managing Director, Mercom India, moderated the discussion.


The panelists discussed a wide range of topics affecting the domestic module manufacturing space and the steps being taken by the government to boost domestic manufacturing.

Last month, the Ministry of New and Renewable Energy (MNRE) issued the list of models and module manufacturers under the Approved List of Models and Manufacturers (ALMM) order. As per the notification, the enlistment is valid for two years and can be renewed on the submission of the necessary documents.

On April 7, 2021, the Union Cabinet approved MNRE’s proposal to implement the PLI program for the ‘National Program on High-Efficiency Solar PV (Photovoltaic) Modules’ to achieve gigawatt-scale manufacturing with an outlay of ₹45 billion (~$605 million).

Speaking on the PLI program and the present state of the domestic manufacturing sector, Amitesh Kumar Sinha said, “The stage is set for the domestic module manufacturing to increase. Yesterday, the cabinet approved the PLI program, which is a big boost for the manufacturing segment. We will require nearly 83 GW of solar modules in the next two years, which is a big number. The government incentive will be given based on the manufacturing capacity and the extent of integration. The higher the efficiency of the solar modules, the higher will be the PLI amount. With regards to BCD, there is a window of one year for old tenders. The denotification of special economic zones (SEZs) can also happen in the near future.”

“We also welcome foreign investors in the domestic manufacturing sector. MNRE will support them. They need to get the required approval from the competent authorities. The manufacturers should also give attention to a strong research and development (R&D) infrastructure,” he said.

Regarding the ALMM program, Sinha said that it would take another 1-2 years to enlist foreign manufacturers, given the Covid-19 situation and the travel bans. “We will keep adding manufacturers to the list. I see India as a future manufacturing hub, and in the next two to three years, we will try our best to become self-reliant in the module manufacturing space.”

Speaking on similar lines, Ranjit Gupta said, “Right now, the India manufacturers are lagging. There are only one or two polycrystalline solar modules suppliers with semi-automatic or automatic lines, which is not enough to meet the growing demand. The enlistment in the ALMM list and the imposition of BCD is a step in the right direction, and we were waiting for it for a long time. The impact will not be instant, and it will take some time before the results kick in. It will take time to settle in. If the policies continue, India will become a strong manufacturing base in the near future. We have been sourcing modules from outside, and unless we get confirmation from local manufacturers, we will not be able to take part in the auctions in the next six to eight months. But that is not the case with everyone, and the increase in tariff is not going to be more than 25%.”

He said that India has about 3.3 GW of cell manufacturing capacity and 16 GW of module manufacturing capacity. But in terms of ingots and wafers, the capacity is zero. To establish a completely independent value chain, India needs to focus on backward integration of manufacturing, including wafers and ingots.

Avinash Hiranandani said, “It is only a matter of time before India becomes a manufacturing hub. Currently, the module manufacturing capacity is around 15 GW, and it is bound to double to 30 GW. The cell manufacturing capacity will also double, which is currently around 3-3.5 GW. There will be an increase in the cell manufacturing capacity, and wafers and ingots will also follow..”

While India is currently heavily dependent on imports from China and other countries to meet its growing demand for solar modules, the government is taking all the necessary steps to give a strong push to the domestic manufacturing sector.

Commenting on the Indian Government’s protectionist announcements regarding the imposition of BCD and enlistment on the ALMM list, Daniel Liu said, “The imposition of BCD is a good step for the Indian manufacturers, and it will help them meet the growing domestic demand. However, it will take some time. India is a big market for us, but to set up a manufacturing base in India is a big question as many factors need to be looked into. For a module manufacturing unit, we need to take care of the financial aspects and get the return on investments as soon as possible. For the enlistment in the ALMM, we will follow the procedure after the lifting of the travel ban due to the Covid-19 pandemic, and it will happen. There are also geopolitical issues that need to be considered before we decide to set up manufacturing units in India.”

You can click here to register for the event.