The Cabinet on Wednesday approved a production-linked incentive for high-efficiency solar photo-voltaic modules with a budgetary outlay of ₹4,500 crore. Manufacturers will be selected through competitive bidding, and the scheme will be carried out over five years, according to an official statement.

This is a third boost to domestic solar sector within a month. The new incentive follows the imposition of the basic customs duty on imported cells and modules and the empanelment of only domestic manufacturers to supply modules for any government-funded solar project.

Spurring investment

The incentive for solar modules is expected to spur a direct investment of around ₹17,200 crore and raise the domestic manufacturing capacity by 10,000 MW, the statement said. The scheme will also lead to direct employment of about 30,000 people and indirect employment of about 1,20,000 people, the statement added.

“The solar sector is highly dependent on imports, which poses risks in supply-chain resilience,” said Hitesh Doshi, Chairman and Managing Director, Waaree Group. “This scheme will make India a manufacturing hub, thereby opening doors to prolific investment and FDI. It is expected to drive an investment of ₹14,000 crore.”

Though solar project developers have been hit by the government’s ongoing push to ramp up manufacturing, they have welcomed the new incentive for manufacturers.