As on date, the 3 giga-watt (GW) of cell manufacturing units and the 14 GW of domestic solar module makers have to import most of their component from outside.
The government is expected to invite bids for the production-linked incentive (PLI) scheme for solar module manufacturing in the next two weeks and beneficiaries will be identified in July, a senior government official said. To reduce the country’s import dependency, the Union Cabinet on Wednesday approved the `4,500 crore solar PLI scheme which is seen to boost the domestic manufacturing capacity.
Speaking at a session on domestic manufacturing in an online summit organised by Mercom India, Amitesh Kumar Sinha, joint secretary at the Union ministry of new and renewable energy (MNRE), said on Thursday that the beneficiaries of the PLI scheme will be selected through competitive bidding and the evaluation of the bids will be done on the basis of manufacturing capacity proposed to be set up by companies and the extent of elementary products required for manufacturing solar panels they promise to make in the country.
Polysilicon, wafers and cells are the basic building blocks for making solar modules, and the minuscule manufacturing base of these products result in continued reliance on imports. A company vying to set up manufacturing capacities for polysilicon, wafers, cells and solar modules will be prioritised for receiving PLI, Sinha added. As on date, the 3 giga-watt (GW) of cell manufacturing units and the 14 GW of domestic solar module makers have to import most of their component from outside.
Companies willing to build polysilicon to module manufacturing units will get three years to commission their plants, while wafer to module units and cell to module plants will get two years and one and a half years, respectively. There will be penalties for commissioning delays from the scheduled timelines through lower PLI receipts. The PLI will be given annually for five years from the date of commissioning. Foreign manufacturers are welcome to apply for the PLI scheme and set up plants either independently or through joint ventures and consortiums. Investments from countries like China which shares border with India will require additional approvals and MNRE will support them in the process, Sinha stated.
“While the exact incentive range has not yet been released by the government, estimates suggest that incentives ranging from 2.25% to 3.75% of incremental sales of manufactured goods could be allowed for the next five years period for selected applicants,” Saurabh Agarwal, tax partner at EY India said.
There will be efficiency parameters set by the government and firms producing more efficient products will be eligible for higher PLI. About 50% of the country’s solar manufacturing capacity currently remains unutilised as developers have preferred to import cheaper equipment, mostly from China, to build solar plants. To boost domestic manufacturing, the Centre had imposed a 25% safeguard duty on solar imports from China and Malaysia in July 2018 for two years, which was extended to July 2021, at a rate of 15%. From the beginning of FY23, solar module and cell imports will attract a basic customs duty of 40% and 25%, respectively.