PLI Scheme on High Efficiency Solar PV Modules

The Union Cabinet has approved a Rs.19,500 crore Production Linked Incentive (PLI) to encourage the manufacture of indigenous solar cell modules. This is a follow-up to the Rs.500-crore tranche approved in November 2020, with the goal of decreasing the industry's dependency on Chinese-made panels. With the second tranche of the PLI programme, the government hopes to install around 65GW per year of manufacturing capacity of completely and partially integrated solar PV modules in the country.

What is the Significance?

This would result in a direct investment of around Rs. 94,000 crore, direct employment of approximately 1,95,000 people, and indirect employment of approximately 7,80,000 people. It would save close to Rs. 1.37 trillion in imports for India. With these plans, we hope to have 70-80 GW of capacity, which will meet both our local and export needs. The PLI benefits, together with State incentives under the State government's industrial policies, concessional/deferral tariff programmes in customs, will help to improve the project's IRR (Internal Rate of Return) and make Indian-manufactured solar PV modules competitive in the market.

What is the PLI Scheme?

About

The PLI scheme was designed to increase indigenous manufacturing capability while also increasing import substitution and job creation. In Budget 2022-23, the government has set aside Rs 1.97 lakh crore for PLI programmes in various industries, with an additional allocation of Rs 19,500 crore for PLI for solar PV modules. The plan, which was launched in March 2020, initially targeted three industries: mobile and allied component manufacturing, electrical component manufacturing, and medical devices.

Objectives

This scheme was implemented by the government in order to lessen India's reliance on China and other foreign countries. It promotes labor-intensive industries and strives to enhance India's employment ratio. This strategy aims to cut import bills while increasing domestic output. PLI Yojana, on the other hand, invites foreign corporations to establish units in India and promotes indigenous industries to expand their production units.

Incentives Under the Scheme

The incentives, computed on incremental sales, range from as little as 1% for electronics and technology products to as much as 20% for the production of crucial key beginning pharmaceuticals and certain drug intermediaries. In some industries, such as advanced chemical cell batteries, textile products, and the drone industry, the incentive will be computed based on sales, performance, and local value addition over a five-year period.

Sectors for which the PLI Scheme has been Announced

The government has so far proposed PLI programmes for 14 industries, including automobiles and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and clothing, white goods, drones, and advanced chemical cell batteries.

Source: PIB