India Urged to Implement PLI Scheme for Transmission

Why in the news?

India’s Power Secretary emphasises the need for a Production Linked Incentive scheme to enhance domestic supply chains for HVDC transmission equipment amid rising project delays.

India Urged to Implement PLI Scheme for Transmission

Need for PLI Scheme in Transmission Sector:

  • Proposal by Power Secretary: Pankaj Agarwal, India’s Power Secretary, emphasised the necessity of a Production Linked Incentive (PLI) scheme to enhance the domestic supply chain for high-voltage direct current (HVDC) transmission equipment.
  • Rationale: The increasing demand for HVDC equipment, crucial for efficiently evacuating green power over long distances, is creating global supply chain constraints, causing delays in connecting renewable energy projects to the grid.

Current Challenges in Transmission Infrastructure:

  • Delays in Grid Connections: Renewable energy projects are facing significant delays in securing connections to the grid, with transformer lead times rising from 50 weeks in 2021 to 120 weeks on average in 2024.
  • Global Investment Lag: According to the International Energy Agency (IEA), global investment in grid infrastructure is falling short, with many advanced projects waiting for transmission system integration.

Future Outlook:

  • Growth Projections: The IEA forecasts that 1,650 GW of renewable energy capacity will require grid connections over the next five years, growing at a compounded annual growth rate (CAGR) of 5%.
  • Call for Stakeholder Action: Agarwal urged stakeholders to optimise costs across the value chain to mitigate delays and support the growing demand for energy storage and integration solutions.

About the PLI Scheme:

  • Initiative: Launched by the Government of India to boost domestic manufacturing.
  • Objective: Provides performance-linked incentives on incremental sales from products made in India.
  • Impact: Aims to reduce imports, enhance production, and create jobs.

Key Features:

  • Budget: In 2021, announced Rs 1.97 lakh crore (US$ 28 billion) for 13 sectors.
  • Targeted Sectors: Includes automobiles, chemicals, electronics, textiles, renewable energy, and more.
  • Implementation: Various ministries/departments are overseeing the schemes.

Scope and Benefits:

  • Cascading Effect: Expected to benefit the Micro Small & Medium Enterprises (MSME) ecosystem.
  • Current Coverage: Active in 14 sectors, including mobile manufacturing, medical devices, and food products.
  • Financial Rewards: Companies receive incentives based on a percentage of their revenue for up to five years.

Associated Article:

https://universalinstitutions.com/production-linked-incentive-pli-scheme/