A new report from JMK Research and the Institute for Energy Economics and Financial Analysis (IEEFA) notes that while the solar PLI scheme has helped lay the groundwork for domestic PV manufacturing, it continues to face significant operational and policy challenges.
As of June 2025, the overall achievement (operational capacity) rate of the solar PLI scheme stood at approximately 29% of the total awarded capacity. Capacity additions remain below targets, with only 59% of module capacity and 14% of polysilicon capacity achieved as of June 2025.
“The scheme channels government support towards measurable industrial output, helping build durable, long-term manufacturing capacity,” says Vibhuti Garg, Director, IEEFA South Asia, and a contributing author of the report.
As of June 2025, India’s PV manufacturing capacity had reached 3.3GW polysilicon, 5.3GW wafer, 29GW cell, and 120GW module. The PLI scheme contributed entirely to the installed polysilicon or equivalent, and accounted for about 75% of wafer capacity, 36% of cell and 24% of module capacities, respectively, signalling strong progress in upstream integration, though downstream expansion remains largely outside the PLI framework.
“However, the PLI scheme for solar PV manufacturing faces implementation challenges like high capital intensity of upstream integration, inadequate incentives, inconsistencies in trade policy, import dependency, and global raw material price volatility,” says Prabhakar Sharma, senior consultant, JMK Research, and one of the report’s authors.
Policy asymmetries — such as unrestricted imports for polysilicon and wafers alongside module restrictions under the Approved List of Models and Manufacturers (ALMM) — and frequent ALMM revisions have created uncertainty for domestic manufacturers. Besides, the scheme’s emphasis on fully integrated wafer-to-module facilities requires steep upfront investments, while incentives cover only a small fraction of production costs.
“India’s reliance on imported machinery, components, and Chinese technical expertise has further slowed capacity ramp-up, a situation worsened by visa restrictions and limited equipment availability,” says Chirag H Tewani, senior research associate at JMK Research, and a co-author of the report.
Meanwhile, global price volatility — especially in polysilicon and wafers — and China’s dominance in upstream production expose Indian manufacturers to cost spikes and supply disruptions. Limited scale in domestic polysilicon production also undermines cost competitiveness, highlighting the structural challenges in achieving a self-reliant and globally competitive solar manufacturing ecosystem.
The report underscores that PLI non-compliance can lead to substantial financial losses for solar PLI awardees. According to JMK Research, across both tranches, solar PLI awardees can incur a monetary risk of up to INR 41,834 crore ($4.80 billion) cumulatively, combining direct penalties (bank guarantees encashment), lost incentives, and unrealised revenue from sales.
The scheme’s trajectory hinges on comprehensive recalibration rather than timeline extensions alone. “Future PLI iterations should focus on improving cost competitiveness, upstream integration and market resilience,” says Aman Gupta, research associate, JMK Research, and an author of the report. Key measures include tax credits, low-cost financing, and risk buffers against global price volatility; layered incentives and longer policy horizons to encourage full value-chain participation; and support for critical components to foster an integrated domestic supply chain.
With the emerging 50% US tariff on Indian solar exports adding pressure, the policy environment is becoming increasingly complex and will require strategic adaptation. The report emphasises that India must develop institutional mechanisms for coordinated policy implementation, and better align incentives with manufacturing timelines and market protection measures, while providing long-term policy certainty.
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