MNRE, FinMin Discuss Capex Relief for Solar Wafer, Polysilicon Manufacturing
MNRE seeks capex relief for solar PV manufacturing to boost domestic production.
Photo by Marija Zaric
The Ministry of New and Renewable Energy (MNRE) is in discussions with the Finance Ministry regarding capital expenditure (capex) relief for wafer and polysilicon manufacturing units. This move aims to boost the upstream segments of solar photovoltaic (PV) module manufacturing within India.
Progress under the PLI scheme has been slow in upstream segments. The discussions are centered on providing financial incentives to encourage domestic production of these critical components, reducing reliance on imports and strengthening the solar energy supply chain.
Key Facts
MNRE seeking capex relief for solar PV manufacturing
Goal: Boost domestic production of wafers, polysilicon
Focus: Upstream segments of solar PV module manufacturing
UPSC Exam Angles
GS Paper III: Economy - Infrastructure: Energy
Link to Make in India initiative and Atmanirbhar Bharat
Potential questions on government schemes, energy policy, and manufacturing sector
Visual Insights
More Information
Background
The push for domestic solar manufacturing has deep roots in India's energy security concerns and its commitment to climate change mitigation. Initially, India relied heavily on imported solar equipment, primarily from China. This dependence raised concerns about supply chain vulnerabilities and the potential for geopolitical leverage.
The Jawaharlal Nehru National Solar Mission (JNNSM), launched in 2010, marked a significant step towards promoting solar energy, but it didn't initially prioritize domestic manufacturing. Over time, the need for a robust domestic solar manufacturing ecosystem became increasingly apparent, leading to policies like the Modified Special Incentive Package Scheme (M-SIPS) and, more recently, the Production Linked Incentive (PLI) scheme, all aimed at reducing import dependence and fostering self-reliance in solar energy.
Latest Developments
In recent years, the focus has intensified on building upstream solar manufacturing capacity, particularly for polysilicon and wafers, where India lags significantly. The PLI scheme for solar PV modules has seen some success in attracting investments in module manufacturing, but progress in upstream segments has been slower than anticipated. Several factors contribute to this, including high capital costs, technological complexities, and competition from established global players.
The current discussions between MNRE and the Finance Ministry signal a renewed effort to address these challenges and provide targeted support to encourage domestic production of these critical components. The government is also exploring measures to promote research and development in solar technologies and create a skilled workforce to support the growing solar industry.
Frequently Asked Questions
1. What is the main goal of MNRE's discussion with the Finance Ministry regarding solar wafer and polysilicon manufacturing?
The main goal is to boost domestic production of wafers and polysilicon, which are critical components in solar PV module manufacturing. This aims to reduce reliance on imports and strengthen the solar energy supply chain within India.
2. Why is MNRE seeking capex relief for solar PV manufacturing?
MNRE is seeking capex relief to encourage domestic production of wafers and polysilicon, the upstream segments of solar PV module manufacturing. Progress under the PLI scheme has been slow in these segments, and financial incentives are needed to attract investment.
3. What are the key facts to remember about this topic for the UPSC Prelims exam?
Key facts include: MNRE seeking capex relief, the focus on boosting domestic production of wafers and polysilicon, and the aim to strengthen the solar energy supply chain. Remember that this initiative targets the upstream segments of solar PV module manufacturing.
Exam Tip
Focus on the 'upstream' aspect - questions may test your understanding of the solar PV manufacturing value chain.
4. What is the potential impact of this initiative on India's energy security?
By boosting domestic manufacturing of solar PV components, this initiative can reduce India's reliance on imports, particularly from countries like China. This strengthens India's energy security by making the solar energy supply chain more resilient and less vulnerable to external disruptions.
5. What are the recent developments related to domestic solar manufacturing?
Recent developments include MNRE's discussions with the Finance Ministry regarding capex relief for wafer and polysilicon manufacturing units. The PLI scheme is in place to promote solar PV module manufacturing, but progress in upstream segments has been slower than anticipated.
6. How does this initiative align with India's climate change commitments?
Promoting domestic solar manufacturing supports India's climate change commitments by increasing the availability of renewable energy. By reducing reliance on fossil fuels, India can lower its carbon emissions and contribute to global efforts to combat climate change.
7. What is the Production Linked Incentive (PLI) scheme and how does it relate to this news?
The PLI scheme is a government initiative to boost domestic manufacturing by providing financial incentives. While the PLI scheme has seen some success in attracting investments in module manufacturing, progress in upstream segments like polysilicon and wafers has been slower, prompting the discussion on capex relief.
8. What kind of questions can be asked in the UPSC Mains exam related to this topic?
Mains questions could focus on the challenges and opportunities in developing a domestic solar manufacturing ecosystem, the role of government policies like PLI and capex relief, and the implications for India's energy security and climate goals.
9. Why is this topic in the news recently?
This topic is in the news because the MNRE is actively discussing capex relief with the Finance Ministry to boost domestic solar PV manufacturing, particularly for wafers and polysilicon.
10. What are the pros and cons of providing capex relief to solar wafer and polysilicon manufacturers?
Pros include boosting domestic production, reducing import dependence, and strengthening energy security. Cons could include potential revenue loss for the government and the risk of inefficient firms benefiting from the relief.
Practice Questions (MCQs)
1. Consider the following statements regarding the Production Linked Incentive (PLI) scheme for solar PV module manufacturing: 1. The scheme aims to incentivize domestic manufacturing across the entire value chain, from polysilicon to modules. 2. The disbursement of incentives is based on actual production and sales of solar PV modules. 3. The scheme is exclusively for private sector companies. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: A
Statement 1 is CORRECT: The PLI scheme aims to boost domestic manufacturing across the solar PV value chain, including polysilicon, wafers, cells, and modules. Statement 2 is CORRECT: Incentives are disbursed based on actual production and sales, ensuring that the scheme rewards tangible output. Statement 3 is INCORRECT: The PLI scheme is open to both private and public sector companies, promoting broader participation.
2. Which of the following statements accurately describes the role of polysilicon in the solar PV manufacturing process?
- A.It is used as a protective coating on solar panels to enhance durability.
- B.It is the primary raw material used to produce silicon wafers, which are then used to create solar cells.
- C.It is used as an adhesive to bind solar cells together in a module.
- D.It is used to create the frame that holds the solar panel together.
Show Answer
Answer: B
Polysilicon is the fundamental raw material in the solar PV manufacturing process. It is purified and then used to create silicon ingots, which are sliced into wafers. These wafers are then processed into solar cells, the basic building blocks of solar panels.
3. Which of the following factors has NOT been a significant challenge in the development of domestic solar wafer and polysilicon manufacturing in India?
- A.High capital costs associated with setting up manufacturing facilities.
- B.Technological complexities involved in polysilicon and wafer production.
- C.Competition from established global players, particularly from China.
- D.Lack of government support and incentives for domestic manufacturers.
Show Answer
Answer: D
While there have been challenges, the Indian government has been actively promoting domestic solar manufacturing through various schemes and incentives, including the PLI scheme and discussions on capex relief. The other options (high capital costs, technological complexities, and global competition) are all significant challenges.