The Indian government has announced a new incentive scheme to boost manufacturing in the solar power sector. Through this scheme, the government plans to disburse more than $600 million in incentives over the next five years.

India’s Ministry for New and Renewable Energy recently announced the guidelines for a production-linked incentives scheme for the solar equipment manufacturing sector. Incentives will be offered to manufacturers of polysilicon, wafers, cells, and modules. The Ministry will call for bids from manufacturers in order to allocate the earmarked incentive.

The Ministry plans to award incentives to at least three different companies and, therefore, the manufacturing capacity eligible for incentives will be limited to 50% of the bid capacity quoted or 2 gigawatts, whichever is lower. However, to be eligible for incentives, a company must set up at least 1 gigawatt of the production line. The scheme is open to companies looking to set up new production lines as well as those looking to expand existing lines.

Selection, as well as disbursement of incentives, shall be based on the capacity bid by companies, the efficiency of modules produced, and the extent of integration across the polysilicon-to-module value chain. Companies will be required to commission their production lines within 1.5–3 years of winning the bids.

Rating agency ICRA noted that the scheme could support the development of 21 gigawatts of cell-to-module production capacity over the next five years. This new capacity would be able to meet around 50% of India’s annual demand for modules during this period.

The production-linked scheme is the latest in a series of efforts by the Indian government to support domestic solar equipment manufacturing. India currently levies a safeguard duty of 14.8% on imported solar cells and modules. In March, the government decided to levy customs duty of 40% on modules and 25% on solar cells.

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