The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme was launched in 2019 and in FY2020/21 was expanded to add a total solar capacity of 30.8GW by 2022, up from the initial target of 25.7GW. The total central financial support allocated under the scheme is Rs34,035 crore (~US$4.6b). With proper execution of the government scheme under the Domestic Content Requirement (DCR) purview, domestic manufacturers can boost their visibility, potentially exposing themselves to greater demand opportunities in the Indian market.

The scheme is divided into three components.

  • Component A: Setting up of 10,000MW of decentralised ground-mounted grid-connected solar or other renewable energy-based power plants
  • Component B: Installation of 2 million standalone solar agriculture pumps
  • Component C: Solarisation of 1.5 million existing grid-connected agriculture pumps

Using DCR cells and modules is mandatory for components B and C. As of November 2021, under Component A, only 20MW had been installed out of the sanctioned capacity. Out of the sanctioned units under Component B, 75,000 standalone solar pumps had been installed in various states. Under Component C, solarisation of more than 1 million grid connected pumps had been allocated under two variants, individual pump and feeder level. Of the allocated units, only 1,000 had been installed.

Figure 16: Sanctioned Capacity Under PM-KUSUM Scheme, as of November 2021
Source: JMK Research.
Note: Installed units under Component C indicate solarised pumps under individual pump solarisation variant of Component
C. Implementation of feeder level solarisation variant under Component C (introduced in December 2020) has not been considered in the figure above.

Grid-connected Rooftop Solar Program

In December 2015, phase 1 of the program was launched with the intent of providing incentives for residential, institutional and social segments. For the government segment, achievement-linked incentives were provided. Phase 2 was approved in February 2019 with a target of 40GW of cumulative capacity from rooftop solar (RTS) projects by 2022. Within the ambit of phase 2, incentives in the form of Central Financial Assistance (CFA) were designed on the basis of RTS capacity.

  • For RTS systems up to 3kW capacity – CFA of 40%
  • For RTS systems beyond 3kW and up to 10kW capacity – CFA of 20%
  • In addition, CFA of up to 20% for RTS, limited to 500kW capacity, for supply of power to common facilities of Group Housing Societies (GHS) and Residents Welfare Associations (RWA).

Discoms of various states and Union Territories (UTs) are implementing the RTS program. The DCR mandate applies for the program’s residential sector, with the aim of spurring development of domestic PV manufacturing. Of the phase 2 target of 4GW set for the residential sector, 3.4GW has been allocated to various states and UTs and of this allocation, 1.07GW had been installed as of November 2021.

Figure 17: Status of Grid-connected Rooftop Solar
Program – Residential Sector, as of November 2021
Source: JMK Research.

A parliamentary panel noted that the target set for solar rooftops cannot be achieved without proper implementation of net/gross metering and there is a need to maintain uniformity in terms of regulations/model operating procedures/online unified portals etc.

Production-Linked Incentive (PLI) Scheme

The Government of India’s Production-Linked Incentive (PLI) scheme, National Program on High Efficiency Solar PV (Photovoltaic) Modules, was officially approved in April 2021. The scheme, with a financial outlay of Rs 4,500 crore (US$616 million), was intended to support 10 GW capacity of integrated solar PV manufacturing plants.

  • In relation to this, additional direct and indirect benefits were foreseen as:
  • Direct investment of about Rs17,200 crore in solar PV manufacturing projects
  • Demand of Rs17,500 crore over five years for Balance of Materials
  • Direct employment of about 30,000 and indirect employment of about 120,000
  • Import substitution of about Rs17,500 crore every year
  • Impetus to R&D to achieve higher efficiency in solar PV modules

In May 2021, the Indian Renewable Energy Development Agency (IREDA), a PSU under the Ministry of New & Renewable Energy (MNRE), invited bids under the PLI scheme for integrated solar manufacturing units.

The total bids received were 54.8GW, resulting in more than fourfold over-subscription. Bidders were shortlisted based on two parameters, extent of manufacturing integration (or extent of integration of manufacturing stages) and manufacturing capacity.

Shirdi Sai Electricals, Jindal India Solar Energy and Reliance New Energy Solar were selected as the PLI beneficiaries for setting up stages 1-4 (Polysilicon + Ingot-Wafer + Cell + Module) integrated manufacturing. Jindal and Shirdi Sai were awarded 4GW each and Reliance secured 2,483MW.

Figure 18: Capacity Allocation Under Solar
Manufacturing PLI Scheme
Source: IREDA, JMK Research.

India’s high import dependency for high-efficiency solar PV products makes it critically susceptible to supply chain disruption and market price shocks.
The PLI scheme can help mitigate the PV supply
chain risks.

However, a cumulative ~10GW of PV manufacturing distributed between three players (the PLI awardees) cannot translate to adequate economies of scale, despite incentives for vertical integration. Additionally, projects under PLI scheme are expected to have a latency period of at least 18-24 months prior to initiation of the manufacturing process.

Moreover, the existing PLI-linked 10GW capacity is now anticipated to be quadrupled with the additional infusion of Rs 19,500 crore into the solar PV PLI budget. This would help in creating a huge demand potential for the PV ancillary market (solar glass, ethylene vinyl acetate [EVA], backsheet, etc.) and skilled workforce. The direct investment in the country on account of the PLI budget expansion could potentially rise to about Rs 90,000 crore.

Basic Customs Duty

On March 9, 2021, the Ministry of Finance approved the imposition of 25% Basic Customs Duty (BCD) on solar cells and 40% on solar modules, with effect from April 1, 2022. The BCD was aimed at improving the price competitiveness of domestic PV products, though the industry regarded it as a counterproductive measure.

Safeguard Duty (SGD) applied for two years, ending in July 2021, on imports from China, Thailand and Vietnam. BCD remains applicable to all imports, regardless of the country of origin, and this has specifically become an additional cause of concern for solar equipment manufacturers in Special Economic Zones (SEZs).

Goods and services from SEZs, when offered to entities in the domestic tariff area, are considered imports and so subject to customs duty. More than half of India’s solar cell manufacturing units and about 40% of solar panel manufacturing units are situated in SEZs. SEZ PV products would become even more expensive than during the duty-free period.

Purchase Preference to Local Suppliers

In a wider decoupling exercise, as part of India’s economic response against China, firms defined as Class 1 local suppliers are the only ones eligible to bid for public procurement contracts if there is sufficient domestic capacity for the nominated product. Class 1 takes in local suppliers or service providers whose goods, services or works offered for procurement have local content of at least 50%.

Solar PV modules are among the products identified as having sufficient local capacity and competition.

Approved List of Models and Manufacturers (ALMM)

The MNRE has made it mandatory for solar cell and module manufacturers to register under the ALMM. The list consists of eligible models and manufacturers of solar cells and modules complying with the Bureau of Indian Standards (BIS) Standards. The objective of ALMM is to enhance domestic manufacturing and to have a quality benchmark for cells and modules. The ministry released the first list of photovoltaic module manufacturers at the beginning of March 2021.

The latest list issued in December 2021 includes 41 module manufacturers and a total capacity of 10.9GW. Standard bidding guidelines from April 10, 2021 require procurement of modules from the approved list.

Validity of models will be for two years from the date of being listed. ALMM consists of a mix of multi-Si and mono-Si (including mono PERC) technology-based modules. Vikram Solar is the sole listed manufacturer with bifacial-type models.

In January 2022, the MNRE amended the list to broaden the ambit of project type for which ALMM models would be eligible. It added open access and net metering projects (in addition to government projects, government-assisted projects, projects under government schemes and programs, the latter including projects set up under Component A of PM-KUSUM).

The amendment will cover renewable energy projects that apply for open access or net metering facility from April 2022.

First Ever Project Development Tender With Manufacturing

In SECI’s 12GW Solar PV (manufacturing linked) tender, Adani Green Energy won a bid for solar panel manufacturing capacity of 2GW of solar and the associated generation capacity of 8GW, out of which a Power Purchase Agreement (PPA) was signed for 5.5GW. For the same tender, Azure Power won a bid for 1GW solar panel manufacturing and 4GW generation capacity, with PPA of 600MW.

Adani will develop its 2GW via its manufacturing subsidiary. Azure Power is set to fulfil its manufacturing component through its tie-up with Waaree.

Key Challenges for Indian Manufacturers

The solar market in India is currently facing more headwinds than usual, especially due to challenges owing to COVID-19. The demand-supply imbalance in terms of solar PV products, although still severe, is gradually alleviating. For domestic PV manufacturers, on the brighter side, the ongoing phase of supply slack presents an opportunity to upgrade manufacturing capabilities. Other stakeholders such as the policymakers, investors, allied manufacturers in the PV value chain etc need to provide a synergistic thrust for development of sustainable PV power in India.

Supply Chain Fluctuations

In mid-2020, the price for a Chinese multi-Si module was ~US$0.18 per watt peak (Wp) and about 1 cent higher for a Chinese mono PERC module. A year later, the prices of the latter rose by ~30% and in December 2021, the landed price of Chinese mono PERC modules climbed to approximately US$0.27/Wp, registering a ~42% spike from the record-low (mid-2020) price.

                                                      …To be continued




Jyoti Gulia
is the Founder of JMK Research. Jyoti has about 15 years of rich experience in the Indian renewable sector. Her core expertise includes policy and regulatory advocacy, assessing market trends, and advising companies on their business strategy.





Prabhakar Sharma is a Senior Research Associate at JMK Research with expertise in tracking renewable energy and battery storage sector. He has previously worked with Amplus Solar.





Akhil Thayillam is a Research Associate at JMK Research. Akhil is a renewable sector enthusiast with experience in tracking new sector trends as well as policy and regulatory developments.





Energy Economist Vibhuti Garg has advised private and public sector clients on commercial and market entry strategies, investment diligence on power projects and the impact of power sector performance on state finances. She also works on international energy governance, energy transition, energy access, reallocation of fossil fuel subsidy expenditure to clean energy, energy pricing and tariff reforms.

JMK Research & Analytics is a boutique consulting firm for all kinds of research and advisory services for Indian and International clients focusing on Renewables, Electric mobility, and the Battery storage market. For further information:

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