Reference Article: Editorial | The Hindu – Manufacturing woes: On non-fossil fuel capacity and PLI schemes
UPSC Relevance:
GS Paper III – Environment & Ecology (renewable energy), Indian Economy (industrial policy, manufacturing, PLI schemes), Energy security and climate commitments
India’s target of installing 500 GW of non-fossil fuel capacity by 2030 relies heavily on the Production Linked Incentive (PLI) schemes as the main industrial driver. Drawing confidence from the success of PLI in telecom manufacturing, the government expects similar outcomes in solar photovoltaics and battery storage, aiming to reduce import dependence and position India as a global green manufacturing hub.
Performance of Solar PLI
- Downstream solar module assembly has progressed relatively well, achieving about 56% of its target by mid-2025
- Critical upstream segments remain severely lagging
- Polysilicon manufacturing has achieved only about 14% of its target
- Wafer manufacturing stands at roughly 10%
- This imbalance exposes continued dependence on imported raw materials, technology and expertise
- High capital costs and technological complexity have led the government to consider additional capital subsidies for upstream segments
Battery Manufacturing Challenges
- The PLI scheme for advanced chemistry cell batteries targets 50 GWh capacity with an outlay of ₹18,000 crore
- By late 2025, only about 1.4 GWh (2.8%) of capacity had been commissioned
- Strict domestic value addition norms (25% in two years, 60% in five years) have slowed implementation
- Gigafactory construction poses significant technical and infrastructure challenges
- Restrictions on visas for Chinese technical experts have further constrained capacity creation
Structural Issues with the PLI Approach
- High-technology manufacturing ecosystems cannot be built through capital incentives alone
- Upstream green manufacturing requires decades of R&D investment, skilled workforce development and process maturity
- Reliance on technology transfer agreements is costly and does not guarantee rapid or sustainable capability building
- Several firms face penalties for missing deadlines, reflecting the gap between ambition and feasibility
Way Forward
- The PLI framework needs recalibration to prioritise technical expertise and know-how over the financial strength of bidders
- Greater emphasis is required on long-term research, skill development and ecosystem creation
- Without addressing upstream vulnerabilities, India risks remaining an assembler rather than a full-spectrum green manufacturing power
Conclusion
While PLI schemes have energised India’s clean energy manufacturing ambitions, their current design underestimates the complexity of high-technology production. Achieving climate and industrial goals will require moving beyond incentive-driven models to sustained investments in knowledge, skills and upstream capacity.
Sample UPSC Mains Question
India’s Production Linked Incentive (PLI) schemes are central to its clean energy transition but face structural challenges in high-technology manufacturing. Critically analyse the limitations of the PLI approach in solar and battery manufacturing and suggest measures to strengthen India’s green industrial ecosystem.