PLI scheme, basic customs duty to improve cost competitiveness of domestic players by 10%: ICRA

Production-linked incentive (PLI) scheme along with imposition of basic customs duty (BCD) on imported cells and modules from April 2022 will improve the cost competitiveness of domestic module manufacturers by over 10 per cent, according to rating agency ICRA.

The scheme has been approved with a financial outlay of Rs 4,500-crore over a period of five years aimed at supporting about 21 GW of module supplies from domestic manufacturers.

“The benefits available under the PLI scheme, BCD on imported cells and modules are likely to improve the cost competitiveness of domestic manufacturers against imported modules by more than 10 per cent at the prevailing imported module prices, under assumption of backward integration up to cells,” said Girishkumar Kadam, co-group head and vice-president – corporate ratings, ICRA.

He added that given the focus on development of integrated solar module manufacturing facilities, timely selection of such projects under this scheme and implementation of the manufacturing capacities with value addition thereafter remains important to reduce the dependence on module imports.

The Ministry of New and Renewable Energy had notified guidelines for the PLI scheme to promote the domestic manufacturing of high efficiency solar modules to reduce import dependence.