Union Cabinet Approves PLI Scheme for Solar PV Modules Manufacturing

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In the Union Budget 2021-22, presented on 1st February 2021, the Finance Minister announced an outlay of INR 1.97 Lakh Crores for the Production-Linked Incentive (PLI) Schemes for 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. On 7th April 2021, Union Cabinet, chaired by PM Modi, approved MNRE‘s proposal on Production Linked Incentive (PLI) scheme for Solar PV Modules production.

National Programme on High Efficiency Solar PV Modules Production

The Union Cabinet has approved has approved the Ministry of New & Renewable Energy‘s proposal for implementation of the Production Linked Incentive (PLI) Scheme ‘National Programme on High Efficiency Solar PV (Photo Voltic) Modules‘ for achieving manufacturing capacity of Giga Watt (GW) scale in high efficiency solar PV modules with an outlay of Rs.4,500 crore.

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.

Solar PV manufacturers will be selected through a transparent competitive bidding process. PLI will be disbursed for 5 years post commissioning of solar PV 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.

Expected outcomes

The outcomes/ benefits expected from the scheme are as follows:

  1. Additional 10,000 MW capacity of integrated solar PV manufacturing plants,
  2. Direct investment of around Rs.17,200 crore in solar PV manufacturing projects
  3. Demand of Rs.17,500 crore over 5 years for ‘Balance of Materials’,
  4. Direct employment of about 30,000 and Indirect employment of about1,20,000 persons,
  5. Import substitution of around Rs.17,500 crore every year, and
  6. Impetus to Research & Development to achieve higher efficiency in solar PV modules.

What are Production Linked Incentive (PLI) Schemes ?

In the Union Budget 2021-22, presented on 1st February 2021, the Finance Minister announced an outlay of INR 1.97 Lakh Crores for the Production-Linked Incentive (PLI) Schemes for 13 key sectors. PLI Schemes are a cornerstone of the Government’s push for achieving an Atmanirbhar Bharat. The objective is to make domestic manufacturing globally competitive and to create global Champions in manufacturing. 

The strategy behind scheme is to offer companies incentives on incremental sales from products manufactured in India, over the base yearThey have been specifically designed to boost domestic manufacturing in sunrise and strategic sectors, curb cheaper imports and reduce import bills, improve cost competitiveness of domestically manufactured goods, and enhance domestic capacity and exports. This means that minimum production in India as a result of PLI Schemes is expected to be over US$ 500 billion in 5 years.

The first three PLI Schemes were approved earlier in March, 2020 and these were followed by another 10 New PLI Schemes in November, 2020. Of these, the previous three Schemes have been notified, and six of the ten New Schemes have also been approved by the Cabinet as below:

  1. Electronic/Technology Products – MeitY(notified on 3 March 2021)
  2. Pharmaceuticals drugs – D/o Pharmaceuticals(notified on 3 March 2021)
  3. Telecom & Networking Products –  D/o Telecommunications(notified on 24 Feb 2021)
  4. Food Products  –Ministry of Food Processing Industries
  5. White Goods (ACs & LED) – DPIIT
  6. High Efficiency Solar PV Modules  –MNRE

Another four Schemes are in process of obtaining Cabinet approval as below:

  1. Automobiles & Auto Components – D/o Heavy Industry
  2. Advance Chemistry Cell (ACC) Battery – D/o Heavy Industry
  3. Textile Products: MMF segment and technical textiles – M/o Textiles
  4. Specialty Steel  –M/o Steel