India looks to plug solar supply-chain gaps with new subsidy push: Report

The PLI scheme launched in 2021 aimed to build fully and partially integrated solar manufacturing facilities

• India to introduce new subsidies for upstream solar manufacturing
• Domestic wafer and polysilicon capacity low, imports still needed
• Govt aims to reduce imports and enhance self-reliant solar supply chains

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India is looking to fix a weak link in its solar manufacturing chain, even as panel and cell production has expanded rapidly in recent years. As per a report by the Indian Express, the government is now considering targeted support for upstream solar manufacturing, where progress has lagged.

The focus is on polysilicon, wafers and ingots-critical inputs for solar cells and modules that India still largely imports. Officials in the Ministry of New and Renewable Energy (MNRE) told The Indian Express that a new capital subsidy scheme is under discussion to encourage investment in these segments. This proposal would be separate from the existing Production Linked Incentive (PLI) scheme for high-efficiency solar modules.

While the PLI programme has helped boost downstream manufacturing, The Indian Express reports that upstream segments have struggled to take off. Polysilicon manufacturing, in particular, requires large upfront capital and access to low-cost electricity, making projects difficult to sustain. Competitive pricing from China has added further pressure, discouraging domestic investment.

India's solar module manufacturing capacity is currently sufficient to meet domestic demand, the newspaper notes. However, the same cannot be said for solar cells, wafers and polysilicon, where domestic capacity falls short and imports remain unavoidable. Industry data cited by The Indian Express shows that a sizeable share of wafers and polysilicon used in the country continues to come from overseas suppliers.

The PLI scheme launched in 2021 aimed to build fully and partially integrated solar manufacturing facilities. While module assembly has seen strong progress, The Indian Express highlights that capacity creation in wafers, ingots and polysilicon has been significantly slower, with many approved projects failing to become operational.

To correct this imbalance, MNRE is in talks with the Ministry of Finance on providing direct capital support for upstream projects that were sanctioned earlier but did not take off, officials told The Indian Express. The intent is to lower entry barriers and make domestic production of key solar inputs commercially viable.

If these measures move forward, The Indian Express notes that they could reduce India's dependence on imports, strengthen supply chains and support the country's long-term goal of building a self-reliant solar manufacturing ecosystem.