India’s PLI Drives Growth in Solar Manufacturing Sector: Report

The report says that most of the progress will depend on sustained policy coherence, capital mobilisation and upstream integration

India’s Production-linked incentive (PLI) for high-efficiency solar photovoltaic (PV) modules has spurred growth in the solar manufacturing sector as the country’s PV capacity reached 3.3 gigawatts (GW) polysilicon, 5.3 GW wafer, 29 GW cell, and 120 GW module in June 2025, according to the new analysis by the Institute for Energy Economics and Financial Analysis and JMK Research & Analytics. 

The scheme that was launched in 2021 with an outlay of ₹4,500 crore received a strong industry response, which led to an additional budget allocation of ₹19,500 crore in 2022, bringing the total to ₹24,000 crore. 

The report said that whatever limited polysilicon and wafer capacities exist in India have come solely through the PLI scheme — underscoring India’s continued upstream dependence on imports — while about 36% of total cell and 24% of module capacity originate from PLI allocations. 

Implementation Challenges Remain 

Prabhakar Sharma, who is a senior consultant at JMK Research and Analytics and the author of this report, said, “The PLI scheme for solar PV manufacturing faces implementation challenges like high capital intensity of upstream integration, inadequate incentives, inconsistencies in trade policy, import dependency, and global raw material price volatility.”

The report found that there are policy asymmetries such as, unrestricted imports for polysilicon and wafers alongside module restrictions under the Approved List of Models and Manufacturers (ALMM), and frequent ALMM revisions have created uncertainty for domestic manufacturers.The scheme’s emphasis on fully integrated wafer-to-module facilities requires steep upfront investments, while incentives cover only a small fraction of production costs.

Global price volatility, especially in polysilicon and wafers, and China’s dominance in upstream production exposed Indian manufacturers to cost spikes and supply disruptions, as per the report. It highlighted that limited scale in domestic polysilicon production has also undermined cost competitiveness, highlighting the structural challenges in achieving a self-reliant and globally competitive solar manufacturing ecosystem.

The report underscored that PLI-non compliance can lead to substantial financial losses for solar PLI awardees. According to JMK Research, across both tranches, solar PLI awardees can incur a monetary risk of up to ₹41,834 crore cumulatively, combining direct penalties (bank guarantees encashment), lost incentives, and unrealised revenue from sales.

Comprehensive re-evaluation of the scheme is necessary 

The report said that the success of the scheme is hinged on comprehensive re-valuation rather than timeline extensions alone. Aman Gupta, research associate, JMK Research, and an author of the report, said, “Future PLI iterations should focus on improving cost competitiveness, upstream integration and market resilience.” 

The report also suggested additional key measures such as including tax credits, low-cost financing, and risk buffers against global price volatility; layered incentives and longer policy horizons to encourage full value-chain participation; and support for critical components to foster an integrated domestic supply chain.

The report emphasised the need for strategic adaptation due to the emerging 50% US tariff on Indian solar exports.  It said India must develop institutional mechanisms for coordinated policy implementation and better align incentives with manufacturing timelines and market protection measures.  This will also provide long-term policy certainty.

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