production-linked incentive

Oversupply is hitting some solar manufacturers hard but grid constraints and labor shortages are unlikely to hold the solar industry back in 2024.

After years of debate, the Indian government made domestic manufacturing a central feature of renewables policy in 2021. The pivot came as the government sought economic growth and self-sufficiency following a border conflict with China. Vinay Rustagi, managing director of Bridge to India, says that trade barriers, subsidies, lower taxes, and demand growth have created the perfect recipe for expansion.

A lack of clear policy support, raw material dependency, and higher production costs are inhibiting the localization of European solar manufacturing, despite strong demand.

Ratings agency Crisil estimates India will have 38-43GW of annual solar module manufacturing capacity by the end of March 2025. Production capacity will be driven by strong domestic demand, favorable government policy, raised module conversion efficiency, and price competitiveness, according to the ratings agency.

Under a production-linked incentive scheme, the government will reward manufacturers for building vertically integrated PV production lines. The scheme aims to attract 10 GW of production capacity by April 2023.