The Union cabinet on Tuesday approved the proposal of ministry of new and renewable energy (MNRE) for ramping up domestic manufacturing of solar photovoltaic (PV) panels under the ‘Production Linked Incentive’ scheme of the Centre. The proposed scheme is envisaged to create additional 10,000 MW capacity of integrated solar PV manufacturing plants in the country.
Under the PLI scheme, the Cabinet in November 2020 had approved Rs 4,500 crore for manufacturing of ‘High Efficiency Solar PV Modules. The nodal ministry MNRE thereafter proposed a ‘National Programme on High efficiency solar PV modules’ for the same.
“Solar capacity addition presently depends largely upon imported solar PV cells and modules as the domestic manufacturing industry has limited operational capacities of solar PV cells and modules. The National Programme on High Efficiency Solar PV Modules will reduce import dependence in a strategic sector like electricity. It will also support the Atmanirbhar Bharat initiative,” said the statement of the government.
The scheme is likely to give a boost to the domestic manufacturers. Solar manufacturing is still nascent in India and the Centre has been trying to reduce import dependence.
Adani Green, Azure Power, Kolkata based Vikram Solar, Mumbai based Waaree Solar are some of the leading solar panel manufacturers in India. Goldman Sachs promoted renewable project developer ReNew Power recently announced its entry in the solar manufacturing space.
“The PLI scheme will make India become self-sufficient and self-reliant and while it puts the spotlight on domestic manufacturers, it will also make the country a key global supplier. By diverting demand to India, the domestic manufacturers will get the much-needed confidence to invest in expanding capacity. It will make the sector more operational and accessible to foreign players,” said Hitesh Doshi, Chairman and Managing Director, Waaree Group.
Under the scheme designed by the MNRE, the manufacturers will be selected through a transparent competitive bidding process and PLI will be disbursed for five years post the commissioning of the manufacturing plants, on sales of high efficiency solar PV modules.
“Manufacturers will be rewarded for higher efficiencies of solar PV modules and also for sourcing their material from the domestic market. Thus, the PLI amount will increase with increased module efficiency and increased local value addition,” said the statement by the Cabinet.
Doshi, however, said, “Athough a concentrated PLI scheme can incentivize manufacturers, the solar sector requires additional investment to create an ecosystem that encompasses the complete demand-supply value chain.”
India has set an ambitious target of 175 GW of renewable energy capacity by 2022. This includes 100 GW from solar and 60 GW from wind energy. The current solar power capacity of 32 GW has however come on the back of imported content.
Close to 75 per cent of India’s solar power capacity is built on Chinese solar cells and modules. India’s solar cell (component of a solar panel) manufacturing capacity stands at 3 GW and of module (finished product) is 5 GW, while the country’s solar power generation capacity stands at 32 GW.
India awarded its first solar manufacturing tender earlier this year. Under this, Adani Green and Azure Power will construct solar cells and module manufacturing of 2 GW and 1 GW respectively.
MNRE in a recent notification said for any procurement by the Central government agencies and nodal departments, the preference would be given to local products for which there is sufficient local capacity.
As part of the country’s recent efforts to ban imports from China, the MNRE has also proposed 20 per cent Basic Customs Duty (BCD) on imports of solar cells and modules.