India’s Solar PLI: Domestic Module Manufacturing, Carbon Implications, and What It Means for Industrial RE Procurement
India’s PLI scheme for solar has created committed manufacturing capacity of approximately 48.3 GW across its tranches, scaling robustly toward 2028. Domestic solar manufacturing changes the embedded carbon of Indian solar installations, the cost of open access RE for industrial buyers, and the Atmanirbhar Bharat tariff architecture. All three dimensions matter for industrial RE procurement strategy.
Key Takeaways
- India’s Production-Linked Incentive (PLI) scheme for high-efficiency solar PV modules spanning two tranches with a total outlay of Rs 24,000 crore has attracted committed investment from 14 major domestic manufacturing consortiums, targeting an aggregate capacity of 48.3 GW. Major PLI recipients include Adani Solar, Reliance New Energy, Shirdi Sai, Waaree, and Vikram Solar, expanding facilities across Gujarat, Rajasthan, Andhra Pradesh, and Tamil Nadu.
- The PLI Tranche II scheme is structured in three baskets based on integration depth: Basket 1 (Polysilicon + Wafer + Cell + Module), Basket 2 (Wafer + Cell + Module), and Basket 3 (Cell + Module). The incentive is paid on actual sales of PLI-eligible modules over five years, rewarding higher efficiency and higher domestic content. Eligible modules must meet strict minimum efficiency thresholds, heavily incentivising the shift toward TOPCon and high-efficiency mono-PERC technologies over lower-quality commodity modules.
- The Approved List of Models and Manufacturers (ALMM) maintained by MNRE restricts government-procured solar projects (SECI, NTPC, state tenders) to using modules from ALMM-listed manufacturers. After a temporary abeyance in FY24, the ALMM mandate was firmly reinstated in April 2024. This de facto restriction on imported Chinese modules has been the most important driver of domestic solar manufacturing demand. For industrial open access solar buyers (who are not bound by ALMM), the combined effect is to build a domestic supply base that reduces prices over time through scale economies.
- The Basic Customs Duty (BCD) on imported solar modules, 40 percent since April 2022, has created a price wedge that protects domestic capacity from cheaper Chinese imports. While global module prices crashed in 2023-2024, pushing Chinese FOB prices down to Rs 8–11/Wp, the BCD ensures their landed cost remains competitive with domestic ALMM modules. The government’s trajectory relies on domestic scale to achieve long-term cost competitiveness without permanent tariff reliance.
- The carbon implication of domestic solar manufacturing is a reduction in the lifecycle emission intensity of a solar installation relative to imports sourced from coal-heavy regions. This matters for CBAM additionality verification and supply chain rules: Indian PLI modules manufactured on India’s greening grid (at WAEF 0.710 tCO₂/MWh) will have a progressively improving manufacturing-phase carbon footprint compared to polysilicon supply chains concentrated in coal-dominant regions abroad.
- For industrial open access RE buyers, the PLI’s most direct implication is the stabilisation of module prices. Current domestic ALMM module prices hover around Rs 14 to 18 per Watt peak (reflecting the global price crash corrections) compared to landed Chinese import prices of Rs 12 to 15 per Watt peak (after the 40 percent BCD). As PLI manufacturing scales fully, domestic prices are expected to achieve parity or even undercut landed imports, securing competitive capex for industrial captive solar.
India’s solar manufacturing ambition sits at the intersection of three distinct policy objectives: energy security (reducing dependence on Chinese supply chains for a strategically critical clean energy input), industrial development (creating a domestic manufacturing sector with job creation and value-added benefits), and climate ambition (enabling India’s renewable capacity targets at competitive cost). The PLI scheme is the primary instrument for pursuing all three simultaneously and its success in building domestic module manufacturing capacity has been considerable.
For industrial open access RE buyers, the aluminium smelters, steel plants, fertiliser manufacturers, and chemical producers that are building private solar procurement programmes in response to CCTS GEI targets and CBAM embedded emission requirements the PLI’s progress matters in three ways. First, expanded domestic module supply increases the volume of modules available for non-government buyers, reducing the procurement competition between government-tendered utility-scale projects and industrial captive installations. Second, the cost trajectory of PLI modules directly affects the capex of captive solar and the PPA tariff for open access procured solar both of which feed into the landed cost of renewable electricity for industrial consumers. Third, the PLI module’s improving carbon footprint as India’s manufacturing grid decarbonises may become relevant for EU supply chain due diligence assessments that increasingly scrutinise the provenance and lifecycle carbon of solar components used in the supply chains of European industrial customers.
The BCD tariff architecture and its industrial procurement implications
The 40 percent Basic Customs Duty on imported solar module combined with the ALMM restriction on government procurement has created a multi-tiered solar module market in India. Government-procured projects must use ALMM-listed domestic modules and cannot access non-listed imports. Industrial open access buyers and captive solar developers are not bound by ALMM; they can technically import non-ALMM modules for their captive installations. However, the 40 percent BCD applies to all importers, ensuring that Chinese module imports at historically low FOB prices are effectively brought back into price parity with domestic PLI modules once landed. This artificial price parity has channelled significant industrial open access procurement toward domestic suppliers.
Solar Module Cost Comparison — Domestic PLI vs Chinese Import (BCD-Adjusted) · April 2026
| Module Source | FOB Price | BCD (if import) | Landed Cost India | Efficiency (typical) | CBAM Additionality Consideration |
|---|---|---|---|---|---|
| Chinese TOPCon/PERC (non-ALMM) | Rs 8–11/Wp (export price) | +40% BCD → Rs 12–15/Wp | Rs 12–15/Wp | 22–24% | Higher manufacturing-phase carbon footprint tied to coal-heavy polysilicon regional grids |
| Domestic PLI mono-PERC (ALMM-listed) | Rs 14–16/Wp (current) | No BCD (domestic) | Rs 14–16/Wp | 21–23% | Manufacturing grid declining toward 0.50 tCO₂/kWh by 2030 — improving manufacturing-phase carbon |
| Domestic PLI TOPCon (ALMM-listed) | Rs 16–18/Wp (premium) | No BCD (domestic) | Rs 16–18/Wp (premium) | 24–26% | Higher efficiency reduces land requirement and system BOS cost; improving manufacturing carbon |
| Domestic PLI (FY2027-28 projected) | Rs 12–14/Wp (PLI scale economies) | No BCD | Rs 12–14/Wp | 23–25% | Converging with international prices; PLI manufacturing scale fully improving cost competitiveness |
Why the PLI’s carbon argument matters for industrial buyers building CBAM-compliant RE procurement. When an aluminium smelter installs captive solar to reduce its CBAM Scope 2 embedded emissions, the CBAM Implementing Regulation requires additionality verification confirming that the renewable electricity comes from a new additional source. The additionality verification scrutinises the entire procurement chain. Furthermore, as EU supply chain due diligence regulations (CSDDD) begin requiring industrial buyers to disclose the carbon footprint of key input supply chains, the provenance of solar modules used in industrial captive installations may become a disclosure item. Indian PLI modules manufactured on India’s decarbonising grid will have a progressively lower manufacturing-phase carbon footprint than modules manufactured in isolated, coal-heavy grids — a distinction that could become commercially relevant in EU customer supply chain assessments by 2028 to 2030.
Frequently Asked Questions
Does using PLI-manufactured solar modules make a captive solar installation more CBAM-compliant?
The CBAM additionality requirement for renewable electricity focuses on whether the generation source is genuinely new and additional not on the manufacturing origin of the solar modules. A solar installation using imported modules that genuinely generates new renewable power for an industrial facility satisfies CBAM additionality just as much as an installation using PLI-manufactured domestic modules. However, the EU CSDDD supply chain disclosure regulations (applying progressively from 2027) may require disclosure of the upstream carbon footprint of key supply chain inputs. In that context, the lower manufacturing-phase carbon of PLI modules could become a supplier qualification differentiator.
What is the Approved List of Models and Manufacturers and does it apply to industrial captive solar?
The ALMM is a MNRE-maintained list of solar module models and manufacturers that meet defined quality standards for use in government-funded or government-procured solar projects. Reinstated actively in April 2024, the ALMM restriction applies to projects procured by SECI, NTPC, state DISCOMs, and public entities it does not apply to private industrial captive solar installations or open access RE projects procured by private buyers. An industrial company building captive solar can use non-ALMM modules, including imported modules, subject to the 40 percent BCD.
When will PLI-manufactured modules reach full cost competitiveness with Chinese imports?
Full BCD-unadjusted cost competitiveness requires domestic manufacturing costs to decline and absorb fully integrated scale economics. With global prices having crashed significantly recently, the BCD currently provides the essential tariff protection bridging the gap between Rs 8–11/Wp international rates and Rs 14–18/Wp domestic rates. Most industry analysts project true convergence in integration costs by FY2027-28 as the full 48.3 GW of capacity scales across polysilicon, wafers, cells, and modules within India.
Sources
- MNRE — PLI scheme for Solar PV Modules — approved manufacturers list, capacity targets, and incentive structure
- MNRE — Approved List of Models and Manufacturers (ALMM) — current listed manufacturers
- Ministry of Finance — Basic Customs Duty notification on solar cells and modules — 40% from April 2022
- JMK Research — India solar module manufacturing and PLI tracker — capacity and cost trajectory
- BloombergNEF — Global solar module price tracker — Chinese vs India domestic cost comparison
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