India is preparing a $1 billion capital subsidy to accelerate its solar manufacturing industry, focusing on reducing reliance on Chinese imports and positioning itself as a leader in the global energy transition, according to sources familiar with the matter. The Ministry of New and Renewable Energy is spearheading the proposal, which aims to bolster domestic wafer and ingot production, currently one of the weakest links in India’s solar supply chain.
Government’s Strategic Push for Self-Reliance in Solar Manufacturing
The proposed subsidy plan, which has gained support from top advisers in Prime Minister Narendra Modi’s office, is expected to be presented to the cabinet for approval in the coming months. The initiative aligns with India’s broader strategy to enhance energy security and cut dependence on Chinese solar imports, which currently dominate the supply of essential photovoltaic components.
While India has significantly expanded its solar module and cell production capacity, domestic wafer and ingot manufacturing remains limited, with only 2 gigawatts of capacity—entirely built by Adani Enterprises Ltd. By contrast, India has 71 gigawatts of module production and nearly 11 gigawatts of cell manufacturing capacity, according to BloombergNEF data.
Lessons from India’s Mobile Manufacturing Success
The solar subsidy plan is modeled after India’s successful mobile phone manufacturing incentives, which helped attract tech giants like Apple and Samsung to set up production facilities in the country. Apple’s iPhone exports from India have surged under this policy, and the government hopes to replicate this success in the solar industry by creating a self-sufficient and competitive manufacturing ecosystem.
Challenges in Scaling Domestic Solar Production
One of the major challenges in domestic solar manufacturing is the high cost of producing wafers and ingots, driven by logistics expenses and quality control issues. The new subsidy plan is expected to ease these constraints, making production more viable for local manufacturers.
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However, despite expanding wafer and ingot production, India will still remain dependent on foreign suppliers for polysilicon, the ultra-refined raw material used in manufacturing these components. India currently has no polysilicon production capacity, while China dominates global production with an annual capacity of 2.3 million tonnes, far surpassing Germany, the second-largest producer, with 75,000 tonnes.
A Step Toward Energy Independence
The proposed subsidy plan signals India’s commitment to reducing supply chain vulnerabilities and strengthening its renewable energy sector. By investing in solar infrastructure and manufacturing, India aims to compete on a global scale, boost domestic production, and create a more resilient clean energy ecosystem in the years ahead.
