India’s solar mission could become an import-intensive initiative, heavily reliant on China, if the government does not take steps to boost domestic manufacturing of key components, industry insiders have warned.
India has set a target of 280-300 gigawatts (GW) solar power capacity by 2030, creating a huge demand for components such as ingots and wafers, needed to make cells and modules.
Domestic manufacturing of solar panels and cells has picked up through various government interventions. But backward integration of these factories with the production of ingots and wafers from polysilicon, an essential material for the solar industry, remains negligible, as the absence of tariffs and other import barriers is forcing all these companies to buy from China, which offers these products at a much lower price.
“The government has multiple options such as offering subsidy or levying an anti-dumping duty on import of polysilicon, ingot and wafers to boost local capabilities,” said a senior official of the ministry of new and renewable energy (MNRE).
It can also issue a third approved list of models and manufacturers (ALMM) for ingots/wafers, which will mandate their use in downstream cell and module manufacturing, he said.
Polysilicon, ingots and wafers are used in making solar cells, which, in turn, make solar photovoltaic modules or solar panels. Solar modules or panels rely on crystalline silicon as the absorber of sunlight.
A high-purity form of silicon, polysilicon is an essential material component of solar panels. It is melted at high temperatures to form ingots, which are then sliced into wafers and fabricated into photovoltaic (PV) cells.
A second official, however, added that despite meetings, no decision has been taken yet as the polysilicon manufacturing process is technologically and raw material-intensive, requiring high-purity silicon. It is not only electricity-intensive but also requires the extraction of quartz from a silica mine.
The government may likely focus on domestic manufacturing of wafers and ingots for now, while allowing polysilicon to be imported, the official said.
Imported ingots, wafers and polysilicon
India is importing almost all its ingots, wafers and polysilicon as the country lacks manufacturing capacity beyond solar panels and cells.
The country’s solar panel manufacturing capacity is at least 70 gigawatts (GW) and that of cell modules at 8 GW. About three-four years ago, the manufacturing capacity for modules and cells was almost at zero. The increase can be attributed to a multi-pronged approach of the government, which imposed a basic customs duty on solar modules while issuing an ALMM and offering production-linked incentives (PLIs).
According to CareEdge Ratings, India’s module manufacturing capacity could hit 120 GW by FY27.
Solar cell manufacturing capability is likely to more than quadruple to 43-47 GW by June 2026 from 10 GW in March 2024. The average annual demand is expected to be 40-45 GW between fiscals 2027 and 2030, CRISIL Market Intelligence and Analytics estimates.
While manufacturing of panels and cells has taken off, industry stakeholders are concerned about ingots, wafers and polysilicon, which are being imported from China.
PLI not enough
The present PLI scheme is meant for a total capacity of only 15.4 GW, which includes polysilicon, wafers, cells and solar panels. These capacities are under construction by Reliance Industries, First Solar, and Indosol Solar Pvt Ltd.
Another bucket of 16.8 GW is meant for wafers to cells to modules, which is being built by Waaree Group, Avaada, JSW Group, ReNew and Grew Energy Private Ltd.
As of now, India has only 2 GW of wafers and ingots manufacturing capacity owned by the Adani Group and it does not have a PLI.
“A fresh capital subsidy programme for new wafer-ingot and polysilicon capacities and priority lending at lower interest rates and dedicated funds for domestic capacity creation is needed. Also, accelerated depreciation for plant and machinery and concessional corporate tax rates must be given to such units,” the Indian Solar Manufacturers Association (ISMA) urged the government in a presentation.
It also demanded timelines and a roadmap for duty protection from imported polysilicon, ingot, and wafer, while also seeking an ALMM for such components.
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