India’s solar production-linked incentive (solar PLI) scheme for high-efficiency solar photovoltaic (PV) modules has triggered a sharp surge in domestic solar manufacturing capacity.
Operational module capacity has expanded significantly to 120 GW, with cell capacity reaching 29.3 GW as of June 2025. This surge, directly attributed to the solar PLI scheme, marks a substantial increase in India’s industrial footprint and progress toward self-reliance. The scheme has successfully linked government support to actual manufacturing output, attracting substantial investment.
Highlights:
The report highlights impressive operational capacity figures as of June 2025:
- Module Capacity: Expanded significantly, reaching 120 GW.
- Cell Capacity: Hit 29.3 GW.
Crucially, all installed polysilicon and wafer capacity—though limited in scale—has emerged solely through the PLI scheme, showcasing its vital role in kickstarting the upstream segments of the value chain.
Upstream reliance creates bottlenecks:
Despite the impressive numbers, a joint report by JMK Research and IEEFA highlights persistent structural and policy challenges. The key hurdle is the continued high reliance on imports for upstream components like polysilicon and wafers.
While the solar PLI scheme has prompted only a limited domestic polysilicon and wafer capacity to emerge, India remains heavily dependent on imports for these critical raw materials. This dependency erodes cost competitiveness against global leaders and constrains the ambition for a fully integrated domestic capacity supply chain.
Weakest Link: Polysilicon and wafer segments are identified as the weakest links in India’s solar value chain.
Import Dependency: India remains heavily dependent on imports for these raw materials, which erodes cost competitiveness against global leaders, particularly China. This constraint severely limits the ambition for a fully integrated domestic capacity supply chain that extends from raw material to finished module.
Technology Reliance: Furthermore, the capacity ramp-up is slowed by reliance on imported PV machinery, specialized components, and foreign technical expertise.
Policy gaps and financial risk:
The analysis flags operational and policy impediments that are slowing the full realization of the scheme’s goals, resulting in significant delays and financial exposure for awardees.
Implementation hurdles:
High Capital Requirements: Upstream units (polysilicon and wafer) demand extremely high capital investment, making them financially challenging without further support.
Inadequate Incentives: The current incentive structure is insufficient to fully offset the cost differential and risk associated with setting up capital-intensive upstream facilities.
Trade Policy Inconsistency: Frequent revisions to the Approved List of Models and Manufacturers (ALMM) and policy asymmetries have created uncertainty. Unrestricted imports of polysilicon and wafers, even while module sales were restricted by ALMM, undermined the viability of integrated domestic facilities.
Global Volatility: Exposure to global price volatility in polysilicon and wafers—combined with China’s dominance—continues to create cost and supply shocks for Indian manufacturers.
Lagging achievement and monetary exposure:
Implementation challenges have constrained the overall progress of the scheme:
Delayed Commissioning: As of June 2025, only 31 GW of the planned 65 GW module capacity was operational. The overall achievement rate stood at roughly 29% of the total awarded capacity across both tranches.
Under-Targeted Impact: Total investment attracted and jobs created remain well below the initial targets of the scheme.
Financial Risk: The report warns that PLI awardees face a cumulative financial risk of up to ₹41,834 crore (approximately $4.80 billion). This risk includes penalties from the encashment of bank guarantees, lost incentives, and unrealized revenue due to compliance delays.
Outlook: the need for policy recalibration:
The authors, including Vibhuti Garg, Director, IEEFA South Asia, and Prabhakar Sharma, Senior Consultant, JMK Research, argue that a simple extension of timelines is not enough. Future iterations of the PLI must focus on a comprehensive manufacturing-linked framework to enhance cost competitiveness and upstream integration.
Recommendations include tax credits, low-cost financing, and longer policy certainty to build a resilient and fully integrated domestic capacity solar ecosystem.
