THE HINDU EDITORIAL

By
Anushka_Academy
-
0
38

Manufacturing woes: On non-fossil fuel capacity and PLI schemes

Capital support alone will not add to battery cell manufacturing capacity

India’s quest to install 500 GW non-fossil fuel capacity by 2030 has found its primary industrial engine in the Production Linked Incentive (PLI) schemes. Buoyed by the momentum the scheme generated in telecom manufacturing, where the government pays out a predetermined sum only if companies achieve agreed sales targets annually, ministries expect the initiative to transform India from a net importer of green technology into a global manufacturing hub. Unlike telecom, however, the PLI for high-efficiency solar photovoltaics and advanced chemistry cell battery storage face daunting implementation challenges. While downstream module assembly is robust (achieving 56% of its specific target by mid-2025), the critical upstream segments remain a bottleneck. Polysilicon and wafer manufacturing, the most technology-intensive parts of the value chain, have only reached 14% and 10% of their respective targets. This disparity highlights a persistent reliance on imported raw materials and specialised technical expertise, prompting the government to consider additional capital subsidies to de-risk these high-capex upstream projects.

Similar woes stalk the scheme for battery manufacturing. The progress towards establishing 50 GWh of domestic battery cell production to fuel the electric vehicle revolution, with an outlay of ₹18,000 crore, has been sluggish. By late 2025, only about 2.8% (1.4 GWh) of the targeted capacity had been commissioned. The gap between policy ambition and ground reality in battery manufacturing stems from stringent domestic value addition requirements — mandating 25% within two years and 60% within five — and the immense technical barriers of “gigafactory” construction. To add to these are challenges such as not issuing visas to Chinese technical experts, who will be setting up several manufacturing facilities. The Indian government’s expectation that mere capital support will substantially improve high-technology manufacturing is misplaced. The complex infrastructure required to make it at scale requires decades of research investment and workforce training. While mega corporates expect international technology transfers to accelerate the process, they are capital intensive and do not always translate to near-term gain. Several companies face steep fines for not delivering on their deadlines. A relook at provisions in the PLI scheme to prioritise expertise and technical know-how rather than the net worth of companies bidding for PLI contracts is necessary.