Economy · 22 Aug 2026

Solar PLI polysilicon subsidy gap

Consider the following statements regarding India's solar Production Linked Incentive (PLI) scheme:

  1. The scheme's output-linked payout structure has proven effective in de-risking polysilicon manufacturing, given its multi-year, capital-intensive construction phase.
  2. PLI has been successful in attracting significant private investment into solar cell and module assembly, an area where India previously had minimal domestic capacity.
  3. About 42 GW of announced solar capacity, including 18 GW of solar-only projects, remains without offtake agreements because domestically-assembled modules built on imported polysilicon cannot match the landed price of fully-integrated Chinese panels.
AOnly one
BOnly two
CAll three
DNone
This question is based on: Why India's Solar PLI Success Story Still Can't Find 42 GW of Buyers
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About this question

Why in news

Reports highlighted that despite PLI's success in building India's solar assembly capacity, 42 GW of announced projects cannot find buyers because the upstream polysilicon cost structure remains uncompetitive, prompting calls for a redesigned subsidy instrument.

Why for UPSC

This tests understanding of a scheme's actual design limits - a classic UPSC probe into why an incentive that works for one stage of a value chain (assembly) does not automatically work for another (upstream fabrication).

Prelims summary

India's solar PLI scheme succeeded in attracting investment into cell/module assembly but its output-linked design has not de-risked polysilicon manufacturing, leaving about 42 GW of announced capacity (including 18 GW solar-only) without offtake agreements.

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