Production Linked Incentive scheme for Indian module manufacturers
The PLI scheme, with an outlay of INR 45 billion ($600 million), aims to add 10 GW of integrated solar PV manufacturing capacity by 2025. The scheme includes incentives for manufacturing high-efficiency solar PV modules using advanced technology, and a higher incentive is given to companies that establish their manufacturing units in special economic zones. The PLI scheme also provides support for ancillary units and the raw material supply chain. This policy initiative is expected to boost the growth of domestic manufacturing of solar equipment in India and make it a global manufacturing hub for solar modules.
Waiver of Basic Customs Duty (BCD) In the Union Budget for 2021-22, the Indian government announced the imposition of a basic customs duty (BCD) of 40% on solar modules and 25% on solar cells, which was supposed to be effective from April 2022. However, in September 2021, the government announced a waiver of BCD on solar cells and modules until 31 March 2022, in order to provide relief to the solar power sector, which was affected by rising prices of imported solar equipment. This waiver would encourage domestic manufacturing of solar equipment in India and reduce dependence on imported solar products.
Indian Renewable Energy Development Agency (IREDA) The Indian Renewable Energy Development Agency (IREDA) has announced a $70 million line of credit to support the domestic manufacturing of solar equipment in India. The loan would be used to fund manufacturing facilities for solar cells, modules, and other components used in the solar PV industry. This would provide an impetus to the domestic manufacturing of solar equipment, which in turn would help reduce the cost of solar power in India.
The Indian government has taken several policy initiatives to promote domestic manufacturing of solar equipment in India, including the PLI scheme, waiver of BCD, and the IREDA loan. These initiatives are expected to boost the growth of the solar manufacturing industry in India and make it a global manufacturing hub for solar modules. The PLI scheme, in particular, is expected to add 10 GW of integrated solar PV manufacturing capacity by 2025 and make India self-reliant in solar equipment manufacturing. With the right policy support and incentives, India could emerge as a key player in the global solar equipment market, driving the growth of the solar power sector and contributing to the country’s economic growth.
Module manufacturing involves several stages, each with its own set of processes and equipment. The different stages of module manufacturing include:
- Manufacturing of Polysilicon: This is the first stage of module manufacturing and involves the production of polysilicon from outsourced or domestic M.G. Silica.
- Manufacturing of Ingots-Wafers: In this stage, ingots-wafers are produced from the polysilicon obtained in the first stage. This stage involves cutting, slicing, and polishing the ingots into wafers of specific thickness.
- Manufacturing of Solar Cells: The third stage involves the production of solar cells from the wafers obtained in the second stage. The wafers are processed using various techniques such as doping, etching, and diffusion to create the p-n junctions necessary for the functioning of the solar cells.
- Manufacturing of Modules: In the final stage, solar cells are assembled into modules. The cells are connected in series and parallel to create the desired voltage and current. The modules are then encapsulated and assembled into the final product.
To dominate the different stages of the value chain, Indian companies can plan their strategies based on their strengths and capabilities. For example, companies with expertise in polysilicon production can focus on the first stage of module manufacturing. Similarly, companies with expertise in wafer production can focus on the second stage.
In addition, the Indian government’s PLI scheme can encourage companies to invest in different stages of the value chain. For example, companies can be incentivized to set up plants for the production of high-quality polysilicon or to increase their production capacity for wafers, solar cells, or modules.
Moreover, Indian companies can also focus on developing and investing in newer technologies such as thin-film solar modules or concentrating solar power (CSP) modules. This would not only help Indian companies dominate the value chain but also lead to the development of newer, more efficient solar technologies.
In summary, Indian companies can plan their dominance in different stages of the value chain by leveraging their strengths and capabilities, investing in newer technologies, and taking advantage of government policies and incentives.