India Ratings and Research (Ind-Ra) on 11 May 2021 said the solar production-linked Incentive (PLI) scheme will benefit 8-13 per cent of the photovoltaic energy plant requirement till 2029-30, and aid 20 gigawatt (GW) capacity developments in the next five years. Ind-Ra estimates that the allocation of Rs 45 billion (Rs 4,500 crore) towards the solar modules manufacturing industry by the Ministry of New and Renewable Energy (MNRE) can benefit the sales of 20 GW from the capacity developed under the PLI scheme across the five-year implementation period.

What

  1. It will happen assuming 100 per cent localisation (up to 30 GW in case of 65 per cent localisation).
  2. It also means sanction of the PLI facility which will benefit 4-6 GW of sales annually over five years from commissioning of the beneficiary manufacturing facilities.
  3. The scheme can facilitate additional 8-12 GW annual solar cell/ module manufacturing capacity in India. Sales up to 50 per cent of the manufacturing capacity set up by the winning bidder will benefit from PLI.
  4. This estimate assumes the base PLI rate of Rs 2.25 per watt power and entirely greenfield (new) expansion.
  5. The capacity to benefit under the scheme may further reduce from the stated 20 GW level in case the plants achieve better module efficiency and temperature coefficient than the minimum requirement defined in the notification.
  6. India has set a target to install 280 GW of solar power plants by FY30. Out of this, about 240 GW is under pipeline or yet to be implemented.
  7. It means just 8-13 per cent of this planned requirement is going to benefit directly from the PLI scheme till FY30 (assuming localisation to be between 65 per cent and 100 percent), apart from improving the domestic manufacturing capacity.

Flashback

  1. The government’s production-linked incentive scheme (PLI), instituted in April 2020 for large-scale electronics manufacturing in India, has gained significant traction over the past year.
  2. It offers a simple and direct incentive based on incremental sales, designed to boost domestic manufacturing and attract large investments in mobile phones and specified electronic component manufacturing units.
  3. In November 2020, the PLI scheme was extended to ten more sectors, including food processing, battery storage, automobile components and specialty steel.
  4. The PLI scheme is designed with four objectives: 1) Target specific product areas; 2) Introduce non-tariff measures in order to compete more effectively with cheap imports; 3) Blend domestic and export sales to make manufacturing competitive and sustainable; and 4) Promote manufacturing at home while encouraging investment from within and outside India.