The Union Cabinet has approved the Ministry of New & Renewable Energy’s (MNRE) proposal for the implementation of the Production Linked Incentive (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).

Solar capacity addition depends largely on imported solar PV cells and modules as the domestic manufacturing industry has limited capacity.  The National Program on High-Efficiency Solar PV Modules will reduce import dependence in a strategic sector like electricity. It will also support the Atmanirbhar Bharat (self-reliant) initiative, according to the MNRE.

Solar PV manufacturers will be selected through a transparent, competitive bidding process. The incentive will be disbursed for five years after the solar PV manufacturing plants are commissioned, followed by the sales of high-efficiency solar PV modules.

Manufacturers will be rewarded for higher efficiencies of solar PV modules and sourcing their material from the domestic market. The PLI amount will increase with increased module efficiency and increased local value addition.

The benefits expected from the program are as follows:

• Additional 10,000 MW capacity of integrated solar PV manufacturing plants
• Direct investment of around ₹172 billion (~$2.31 billion) in solar PV manufacturing projects
• Demand of ₹172 billion (~$2.31 billion) over five years for ‘balance of materials’
• Direct employment of 30,000 and indirect employment of about 120,000 workforce
• Import substitution of around ₹172 billion (~$2.31 billion) every year
• An incentive for research and development to achieve higher efficiency in solar PV modules.

In November last year, the government had 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 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.

The solar industry had welcomed the PLI program and believed the initiative could change the face of domestic manufacturing. However, it had sought clarity on some issues regarding the criteria for utilizing the incentives.

Mercom’s flagship event Mercom India Solar Summit, to be held virtually on April 8th and 9th, has an exclusive session to discuss ‘Solar Modules to Make or Not to Make in India?’. You can click here to register for the event. The discussion will revolve around how Indian manufacturers are gearing up to set up new production units backed by duties and a production-linked incentive program.