The announcement, made after a special assembly of India’s Union Cabinet chaired by Prime Minister Manmohan Singh, confirmed two changes have been made to the solar programme since it was first leaked to the press in early 2009.

First, the target date for the 20 gigawatts (GW) of installed capacity has been shoved back two years to 2022, ostensibly to align it with India’s five-year cycle of planning. Second, a plan to tax fossil fuel-fired electricity production in order appears to have been scrapped, raising doubts over the National Solar Mission’s (NSM) funding.

Serious questions also remain regarding how India’s threadbare electrical grid will cope with the NSM.

Nevertheless, the plan is being touted as a boost to India’s credibility as it heads to Copenhagen, and a decisive move for its long-expressed desire to compete with China in the emerging – and increasingly commoditised – solar-energy industry.

The cabinet has only approved $900m for the first phase of the NSM, set to see around 1GW installed primarily across northwestern India by 2012. India’s largest power utilities, such as National Thermal Power Corporation, will pick up the tab.

Building out the full 20GW by 2022 will cost an estimated $19bn. India currently has only 5 megawatts of installed solar capacity, and a handful of solar firms, including Tata BP Solar and Bharat Heavy Electricals.

In addition to offering financial incentives and tax breaks to project developers, the government will also “aggressively” finance research into solar technologies in order to catapult India to the cutting edge of the industry and bring costs down, says New and Renewable Energy Minister Farooq Abdullah.