At the COP26 summit, India committed to reaching 500 gigawatts (GW) of non-fossil energy capacity by 2030. The PLI (Production Linked Incentive) scheme is the government’s flagship program to encourage domestic manufacturing of solar panels, batteries, and other green technologies to meet this goal.

The PLI scheme for Telecom and Networking products (launched in 2021) is often cited as a success story. By setting clear sales targets, the government encouraged companies to invest in India, leading to higher exports and reducing the number of imported electronic parts.

The government introduced these specific PLI schemes to help India manufacture its own solar panels and batteries. These sectors are much harder to build than telecom because they need very advanced factories and large amounts of money and research.

In solar manufacturing, ‘downstream’ refers to the final assembly of panels. ‘Upstream’ refers to the very difficult high-tech process of making polysilicon and wafers from scratch. India is good at assembly but still depends on other countries for the raw upstream materials.

Polysilicon and wafers are the ‘brain’ of a solar panel. While putting the panel together is easy, making these raw materials requires extreme heat, precise chemical reactions, and billions of dollars in investment. This is why the progress here is much slower than in simple assembly.

India currently imports many solar components from China. If there is a political conflict or a trade war, India’s green energy progress could stop. This is why the government is desperate to ‘de-risk’ the industry by paying companies extra to build everything within India, even if it’s expensive.

Just as with solar power, the government launched a PLI scheme to help India make its own advanced batteries. This is crucial for India’s plan to switch from petrol cars to electric vehicles (EVs).

The Indian government wants to ensure that 30% of all cars sold in India by 2030 are electric. To do this, India needs to stop buying batteries from China and start making them at home. The ₹18,000 crore is meant to help companies build these massive battery factories.

The factories needed for this project are called ‘Gigafactories’ because they produce energy storage in gigawatt-hours. These are massive, multi-billion dollar buildings. The low commissioning rate shows that India is finding it much harder to build these than simple phone factories.

To ensure that India doesn’t just become an assembly point for Chinese parts, the PLI scheme requires companies to make a large portion of the battery components locally. For example, 25% of the value must be Indian-made within two years, but finding local suppliers for high-tech chemicals is proving very difficult.

Most of the world’s advanced battery and solar machinery is made in China. While India wants to reduce imports, it still needs Chinese engineers to come to India to install these machines and teach Indian workers how to use them. Delays in giving these engineers visas are slowing down the PLI projects.

The editorial argues that money alone cannot build a high-tech industry. Success in fields like battery making also requires deep scientific research (R&D), years of experience, and a workforce that is already trained in using highly complex machinery.

Building a high-tech industry is not like building a road. A road is finished once it is paved. A high-tech industry like battery manufacturing needs constant learning and improvement over many years. India must be patient and invest in people and science, not just factories.

When a company ‘transfers technology’, it isn’t free. The Indian company must pay huge fees and often buy expensive machines from the foreign partner. Even after spending all this money, it may take the Indian company many years to actually start making a profit.

Under the PLI guidelines, companies sign a contract with the government promising to hit certain production targets by a specific date. If they fail to meet these milestones, they may have to pay back some of the subsidies or pay high penalties to the government. This ensures that only serious companies get help.

The author concludes that the government made a mistake by choosing companies based on their wealth (net worth). Instead, they should have chosen companies that have the best scientists and engineers. Only by choosing ‘experts’ over ‘rich companies’ can India hope to lead in high-technology manufacturing.