India is in the process of finalizing a substantial $1 billion capital subsidy plan aimed at bolstering its solar manufacturing industry. This initiative is part of a broader strategy to reduce dependency on China and capitalize on the global energy transition, according to sources familiar with the matter.
The Ministry of New and Renewable Energy is proposing the plan, which specifically targets domestic manufacturers of wafers and ingots, identified as one of the weaker segments of India’s solar industry. The sources, who requested anonymity due to the private nature of the discussions, indicated that the proposal has the support of top advisers in Prime Minister Narendra Modi’s office. It is expected to be presented to the cabinet for approval in the coming months.
A spokesperson for the Ministry of New and Renewable Energy did not immediately respond to a request for comment.
India’s reliance on China for solar equipment imports poses a risk to the nation’s energy security. Although India has made significant strides in developing its domestic modules and cell manufacturing segments, wafer and ingot production remains limited to just 2 gigawatts of capacity, primarily built by Adani Enterprises Ltd. BloombergNEF data indicates that India has over 71 gigawatts of module capacity and nearly 11 gigawatts of cell capacity.
The proposed subsidy plan aims to replicate the success of India’s mobile-phone manufacturing industry. The Indian government has invested billions of dollars in incentives to attract companies like Apple Inc. and Samsung Electronics Co. to establish manufacturing plants in the country. As a result, Apple’s iPhone exports from India have surged.
In the solar sector, the high cost of producing wafers and ingots is attributed to logistics and quality control challenges. The subsidies are expected to help mitigate these costs. However, even with an expanded wafer and ingot capacity, India would still rely on foreign suppliers for polysilicon, the raw material used in their production. India currently lacks the capacity to produce this ultra-refined material. China dominates global polysilicon manufacturing, with an annual capacity of 2.3 million tons, far surpassing Germany’s 75,000 tons.
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