What's Happening?
India's Production Linked Incentive (PLI) scheme has significantly increased domestic manufacturing of high-efficiency solar PV modules, according to a report by JMK Research and IEEFA. Since 2022, the
country's solar module and cell capacities have expanded to 120 GW and 29.3 GW, respectively, with substantial contributions from the PLI scheme. However, the report highlights ongoing challenges, including high reliance on imports, inadequate incentives, and inconsistent trade policies. The scheme's impact is further limited by global price volatility and reliance on Chinese technical expertise. Despite strong industry interest, the commissioning of PLI-linked projects lags behind targets, with only 31 GW of the planned 65 GW module capacity operational by June 2025.
Why It's Important?
The PLI scheme is crucial for India's goal of achieving a self-reliant solar supply chain, reducing dependency on imports, and boosting domestic manufacturing. The challenges identified in the report, such as high capital requirements and policy inconsistencies, could hinder India's progress in becoming a global leader in solar energy. The U.S. decision to impose a 50% tariff on Indian solar imports adds pressure on domestic manufacturers, as the U.S. is a major export destination. Addressing these challenges is vital for India to maintain its competitive edge and meet its renewable energy targets.
What's Next?
The report calls for a redesign of the PLI scheme, suggesting tax credits, low-cost financing, and longer policy certainty to support upstream segments. The Indian government may need to address these recommendations to enhance the scheme's effectiveness. Additionally, the U.S. tariff on Indian solar imports could prompt India to seek new markets or negotiate trade terms. The outcome of these efforts will significantly impact India's solar industry and its ability to achieve energy independence.
