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Business prospects for domestic solar OEMs is expected to remain strong aided by several policy measures over the medium-term, said ICRA Ratings on Monday.

As per the ratings agency, the trend has led many domestic OEMs to announce sizeable capital expenditure to augment the cell and module capacity, including the capex for integrated facilities under PLI scheme by the winning bidders.

However, timely commissioning and ramp-up of ongoing capex in the module manufacturing value chain remains critical in the near to medium term.

On the policy front, the Centre's focus on the renewable energy (RE) sector remains strong as evident from the target of 500 GW of non-fossil fuel-based capacity by CY 2030 as well as policy direction in the energy transition with net zero emission target by 2070.

"In this context, capacity addition in solar energy segment within the RE is expected to remain significant with about 65-70 per cent share by FY 2030, given the relatively lower execution challenges in solar segment," said Girish Kumar Kadam, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA.

"Further, the GoI has a solid policy focus to encourage domestic manufacturing for photovoltaic (PV) modules through various policy measures announced in last 2-3 year period such as notification of approved list of module manufacturers (ALMM)...

"Besides, given the strong response for the PLI scheme for solar modules, the scheme outlay has been further increased to Rs 240 billion from Rs 45 billion earlier.

This is expected to support the setting up of additional cell & module manufacturing capacity of up to 40 GW," the agency said.

"The module manufacturing units set up under PLI scheme would be eligible for receiving PLI on annual basis on sales of solar PV modules for 5 years from commissioning or 5 years from scheduled commissioning date, whichever is earlier."