Centre’s production-linked incentive for solar modules invites interest from American manufacturers

Kuwar Singh New Delhi | Updated on April 09, 2021

The Cabinet on Wednesday approved a budgetary outlay of ₹4,500 crore for the scheme, which will run over five years

The central government’s production-linked incentive for solar modules will range from 3.5-5.5 per cent of their sales cost.

“The incentive will range from 3.5-5.5 per cent of the sales cost of the high-efficiency module. The exact incentive will be decided based on the production capacity of the plant and the extent of integration of the production process,” a senior official from the Ministry of New and Renewable Energy told BusinessLine.

Manufacturing units that produce modules from the more basic raw materials such as polysilicon or wafers will get more incentive than those that produce modules with cells. Similarly, units that have a production capacity of 4,000MW or above will get a bigger incentive than smaller module makers.

Also read: Solar module makers all charged up

The Cabinet on Wednesday approved a budgetary outlay of ₹4,500 crore for the scheme, which will run over five years. The incentive will be paid annually. “The incentive will be given on half the capacity we allocate. We have sufficient funds to give incentive on a capacity of 5,000MW,” the official said.

Interest from American manufacturers

Two US-based companies, First Solar and 1366 Technologies, have expressed interest in setting up manufacturing facilities in India under the incentive program.

“We are encouraged by the Indian government’s thoughtful PLI proposal and are enthusiastically pursuing manufacturing opportunities in the country,” 1366 Technologies said in a statement.

“First Solar strongly supports India’s prerogative to wean its solar industry away from relying on solar panels either made in China or made by Chinese companies operating in third countries,” Sujoy Ghosh, First Solar’s vice president for India and the APAC region, said in a statement.

“As a credible player in India with a long standing track record that spans two gigawatts of high-quality installed capacity, we remain in close dialogue with the federal and state governments on how we can help enable the country’s solar growth strategy,” he said.

Growing interests

Three public-sector companies — Coal India Ltd., Bharat Heavy Electricals Ltd. and Central Electronics Ltd. — are also known to have expressed interest in the incentive scheme.

Also read: Cabinet allocates ₹10,738 cr for solar modules, ACs & LED lights

In a bid to push for research and development spending by companies, the government will raise the incentive if the manufacturers improve the efficiency of their modules over one or more years, the official said. To improve R&D in the industry, the government is also keen for the participation of foreign players as well partnerships between local and foreign companies, the official said.

“We have allowed the category of joint venture consortium, in which two Indian players can also partner up or collaborate with foreign player,” the official said.

Any foreign manufacturer keen to set up a plant in India will get easy entry into the Approved List of Models and Manufacturers, the official added, even as foreign companies looking to export to India increasingly find the odds stacked against them.

Published on April 09, 2021

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