The Indian government has announced financial incentives to promote domestic manufacturing of solar PV modules and batteries.
India’s ministry of finance recently announced production-linked incentives for companies looking to manufacture solar PV modules and batteries in India. The incentive is available to Indian as well as foreign companies looking to set up shop in India. The Indian government will offer Rs 4,500 crore (US$605 million) for solar PV modules and Rs 18,100 crore (US$2.4 billion) for batteries.
The ministry of finance will provide the sanctioned amount to different ministries, which will then disburse it to manufacturers. The scheme is part of the government’s overall program to promote self-sufficiency in critical manufacturing sectors and reduce dependence on imports.
India has a huge dependence on Chinese imports in the energy and consumer goods sectors. Not long ago, around 90% of solar PV modules used in India were being imported from China. The Indian government imposed safeguard and anti-dumping duties to support Indian manufacturers. While this did result in some decline in Chinese imports, Indian companies failed to take any significant advantage and increase their market share.
The Indian government is now looking to impose a custom duty on solar cells as well as solar modules imported from China. Indian module manufacturers also have a high dependency on Chinese solar cells to produce modules.
This is not the first time that the Indian government has announced financial incentives to promote and support the solar modules industry. Capital subsidies have been available to manufacturers for several years. As the country looks to electrify its automobile sector and increase the share of storage in renewable energy sector, incentives for battery manufacturing gain importance.
This production-linked scheme is similar to the one that has attracted mobile phone manufacturers supplying Samsung and Apple to set up factories in India. There are hopes that incentives for battery as well as automobile manufacturers will also attract the likes of Tesla and other EV makers to the Indian market.