Cabinet approves, PLI scheme for solar PV modules worth Rs 19,500cr

It is finally official. The Cabinet, chaired by Prime Minister Narendra Modi, approved the implementation of the PLI-II (Production Linked Incentive Scheme - Tranche II) for the manufacture of High Efficiency Solar PV Modules. The total PLI that is expected to be paid out in this phase is Rs19,500 crore. The plan here is to create and build an ecosystem for manufacturing of high efficiency solar PV modules in India. This is part of the Atma Nirbhar Bharat initiative and this plan will effectively reduce import dependence. 

To be eligible for the production linked incentive (PLI) scheme the solar PV manufacturers would be selected via a transparent process. The actual PLI will be disbursed for a period of 5 years post commissioning of solar PV manufacturing plants. This PLI plan is likely to proffer several benefits to the economy as a whole, the photovoltaic (PV) module business in particular and for the business environment overall. Here are some of the key benefits of the PLI scheme for PV modules enumerated.

    a) This PLI scheme is estimated to result in about 65,000 MW per annum manufacturing capacity of solar PV modules installed. It will result in direct investments to the tune of Rs94,000 crore into the sector.

    b) The overall scheme implementation is likely to create about 195,000 direct jobs and another 780,000 indirect jobs. The import substitution value of this entire project would be to the tune of Rs137,000 crore which will save a lot of foreign exchange drain.

    c) One of the issues has been that not much was being invested in research and development (R&D) to achieve higher efficiencies in Solar PV Modules. This scheme should fill that hap and also lead to sprouting of specialized research outfits.

In addition to the above, the PLI scheme for semiconductor has also been modified to make it more business friendly and meaningful. 

Key changes to the PLI scheme for semiconductors

Here are some of the highlights of the modified PLI scheme for semiconductors:

    • One of the big changes to the PLI scheme for semiconductors is that the developers are likely to be eligible for higher level of subsidies. The government of India has promised that it will now offer 50% fiscal support for semiconductor fabs across technology nodes and compound semiconductors, as compared to 30% earlier. This will also extend to packaging and other semiconductor facilities.

    • The fiscal support by the government at an enhanced rate of 50% will also be extended to compound semiconductors, silicon photonics, sensors fab and semiconductor ATMP  and semiconductor OSAT facilities in India.

    • The modifications made to the PLI program for semiconductors are expected to expedite investments in semiconductor as well as in display manufacturing in India. While these are early days yet, it is estimated that the work on setting up of the first semiconductor facility in India may be at an advanced stage of negotiation and could commence soon.