India Plans $1 Billion Solar Subsidy to Cut China Dependence

India is set to finalize a $1 billion capital subsidy plan aimed at strengthening its solar manufacturing industry, according to reports. 

The initiative, proposed by the Ministry of New and Renewable Energy, seeks to enhance the domestic production of wafers and ingots—one of the weakest segments in the country’s solar supply chain.

The plan, backed by top advisers in Prime Minister Narendra Modi’s office, is expected to be presented to the cabinet for approval in the coming months. A spokesperson for the ministry did not immediately respond to requests for comment.

India remains heavily reliant on China for solar equipment imports, posing a risk to the nation’s energy security. While the country has significantly expanded its domestic production of solar modules and cells, wafer and ingot manufacturing is still in its infancy, with just 2 gigawatts of capacity, currently built by Adani Enterprises Ltd. In contrast, India has over 71 gigawatts of solar module capacity and nearly 11 gigawatts for cells, according to BloombergNEF data.

The subsidy initiative aims to replicate the success of India’s mobile phone manufacturing industry. The Modi government has spent billions on incentives to attract global giants like Apple Inc. and Samsung Electronics Co., leading to a surge in iPhone exports from India. Officials believe a similar approach could bolster the solar sector by addressing logistical challenges and quality control issues that currently drive up costs.

However, even with an expansion in wafer and ingot production, India would still need to rely on foreign suppliers for polysilicon, the ultra-refined raw material essential for manufacturing. The country currently lacks polysilicon production capacity, while China dominates the global market with an annual capacity of 2.3 million tons, far exceeding Germany’s 75,000 tons.

Also Read: Assam Cabinet Nod for Industrial Park, Energy Policy & Autonomous Council Reforms