In a bid to further increase the share of domestic manufacturing in solar photovoltaic (PV) modules in the country, the Ministry of New & Renewable Energy (MNRE) has suggested providing support across the entire value chain, including to the ancillary industries

The suggestion is part of a number of recommendations shared by the MNRE with the Power Ministry last week during a webinar organised by the government as part of its efforts to facilitate effective and expeditious implementation of the Union Budget 2022. As part of this series, the sectoral group on resources comprising 7 ministries, including Power and MNRE, organised a webinar to deliberate on government initiatives in the energy and resources sector.

Indigenous manufacturing

Sources said that MNRE suggested support for indigenous manufacturing for solar modules to be extended across the entire value chain, including sub-components and materials, to help ancillary industry grow, including MSMEs.

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“MNRE also recommended fast tracking of award of capacities under the production-linked incentive (PLI) scheme. It mooted supporting manufacturing and deployment of solar thermal applications with suitable policy and incentive support, especially in niche areas where these could lead to viable business cases. Also, the Ministry said focus should be on bringing out policies that favour domestic manufacturing over imports,” they added.

According to industry estimates, the value of manufacturing capacity of PV cells and modules in India is around 2.5 gigawatts (GW) for solar cells and around 16 GW for solar PV modules. The total capacity for manufacturing solar panels in the country, in the Approved List of Models and Manufacturers (ALMM) is about 11 GW.

PLI scheme

To incentivise domestic manufacturing of solar PV modules and cells, the government introduced the PLI scheme for high efficiency solar PV modules. In April 2021, MNRE floated the scheme with an outlay of ₹4,500 crore with provisions to support setting up of integrated manufacturing units of high efficiency modules by providing PLI on sales. Letters of Award (LoA) for 8,737 MW capacity have been issued for the amount allocated. Further in the Union Budget for FY23, an additional allocation of ₹19,500 crore for PLI for manufacture of high efficiency modules, has been announced.

India is estimated to have an aggregate potential of more than 1,636 gigawatts (GW) renewable energy (including large hydro). The power generation through various renewable energy (RE) sources (including large hydro) has increased from 203,925.77 million units (MU) in FY17 to 297,547.03 MU in FY21. Besides, India has seen record low RE tariffs of ₹1.99 per KWh for solar power and ₹2.43 per KWh for wind power.

Imports decline

The government’s efforts to increase indigenous production are gradually bearing fruits. Imports of solar photovoltaic modules and cells have declined consistently. The imports during FY19 stood at $2.2 billion before coming down to $1.7 billion in FY20 and $572 million in FY21. 

To further boost domestic manufacturing, the government has announced imposition of Basic Customs Duty on import of solar PV cells and modules with effect from April 2022.