Solar Plants, Batteries Among 10 Sectors In Expanded PLI Scheme

The Union Cabinet has approved the Production Linked Incentive (PLI) Scheme for 10 “key sectors”, including telecom, electronics, solar PV and batteries. With this move, the government has delivered on its promise to encourage manufacturing with direct interventions, especially for the solar PV manufacturing. The battery sector, or advanced chemistry cell (battery) as the government notification calls it, will see focus mainly on manufacturing of newer technology batteries, starting with Lithium ion of course.

Finance Minister Nirmala Sitharaman, while announcing the scheme highlighted its focus on jobs creation and sunrise sectors. “ We want to build our strength in manufacturing and get linked with the global supply chain. This PLI scheme is aimed at getting more efficient and it will make manufacturing easier in India,” she said.

The focus of the scheme is usually on indigenous manufacturing and increase exports, though in the case of Solar PV and batteries, it will definitely be self sufficiency and import substitution also.  A total of ₹1.45 lakh crore has been earmarked for the scheme over a five-year period. Applications for the scheme will be appraised by the Expenditure Finance Committee (EFC), and approved by the Cabinet.

The PLI Scheme is a Central Government scheme that was originally notified in April 2020 for Large Scale Electronics Manufacturing to provide financial incentives for domestic manufacturing of goods and also to attract large investments. The scheme did well enough for an expanded roll out to pharma sector later.

The scheme usually provides a 4 to 6 percent incentive on incremental sales (over base year, 2019-20) to eligible companies for manufacturing goods for 5 years period, subsequent to the base year.

For the Advanced Chemistry Cell (ACC) battery sector, the outlay is a an impressive ₹18,100 crores. ACC batteries are rechargeable batteries than can be used in consumer electronics, electric vehicles and renewable energy. The implementing agency here is going to be Niti Ayog.

The Solar PV manufacturing sector, where we have seen a flurry of announcements related to  manufacturing plans, there is a ₹4,500 crore outlay. The cabinet noted the ‘strategic’ nature of the sector, and the need to make solar supply chains more resilient. The PLI incentive should nudge quite a few plans to move from the planning stage to execution now, with the MNRE as the implementing agency.

For firms like Renew Power, Azure, Adani and many of the existing Indian manufacturers, the schemes will certainly help to push manufacturing plans on course. Renew Power for instance has plans for both solar pv and possibly battery manufacturing too.

For indicative purposes, the government’s recently launched scheme for mobile manufacturing had seen ten manufacturers selected. These included international firms like Samsung, Rising Star, Foxconn Hon Hai, while the domestic brands that made the cut included Micromax, Lava, etc.