India’s ambitious solar mission risks becoming an import-intensive initiative heavily reliant on China if the government does not take immediate steps to strengthen domestic manufacturing of key components industry insiders have warned.
Growing Solar Demand and Manufacturing Gaps
India has set a target of 280-300 gigawatts (GW) of solar power capacity by 2030 creating a massive demand for critical components such as ingots and wafers essential for making solar cells and modules.
While domestic manufacturing of solar panels and cells has gained momentum through various government initiatives the backward integration of these factories—specifically the production of ingots and wafers from polysilicon—remains negligible. The absence of tariffs and import barriers is forcing manufacturers to depend on China, where these products are significantly cheaper.
Industry Experts Call for Policy Intervention
A senior official from the Ministry of New and Renewable Energy (MNRE) has suggested that the government could adopt several measures to boost local capabilities. These include:
- Subsidies for domestic manufacturers.
- Anti-dumping duties on imported polysilicon, ingots, and wafers.
- A third Approved List of Models and Manufacturers (ALMM) for ingots and wafers, making their use mandatory in downstream cell and module production.
Why Are Ingots, Wafers, and Polysilicon Crucial?
Polysilicon, ingots, and wafers are essential in the production of solar cells which are then assembled into photovoltaic (PV) modules or solar panels.
- Polysilicon, a high-purity form of silicon, is melted at high temperatures to form ingots.
- These ingots are sliced into wafers, which are then fabricated into PV cells.
- Crystalline silicon is the key material that absorbs sunlight to generate electricity.
A second official noted that while discussions are ongoing, no decision has been made yet. The polysilicon manufacturing process is technology and raw material-intensive requiring high-purity silicon, large-scale electricity consumption and quartz extraction from silica mines.
For now, the government may prioritize domestic manufacturing of wafers and ingots while allowing polysilicon imports the official added.
India’s Heavy Import Dependence
Currently, India imports nearly all its ingots, wafers, and polysilicon as its domestic manufacturing capacity remains limited to solar panels and cells.
- India’s solar panel manufacturing capacity stands at 70 GW.
- Cell manufacturing capacity is 8 GW, a sharp rise from near zero just three to four years ago.
- This increase is due to the government’s multi-pronged approach including basic customs duties on modules, ALMM regulations, and production-linked incentives (PLIs).
According to CareEdge Ratings, India’s solar module manufacturing capacity is projected to reach 120 GW by FY27.
Meanwhile, CRISIL Market Intelligence and Analytics estimates that India’s solar cell manufacturing capability will more than quadruple from 10 GW in March 2024 to 43-47 GW by June 2026. The average annual demand is expected to be 40-45 GW between FY27 and FY30.
Despite this progress, the reliance on China for ingots, wafers, and polysilicon remains a concern for industry stakeholders.
PLI Alone Not Sufficient
The current PLI scheme supports only 15.4 GW of fully integrated manufacturing capacity, covering polysilicon, wafers, cells, and solar panels. These capacities are under development by companies like:
- Reliance Industries
- First Solar
- Indosol Solar Pvt Ltd
Another 16.8 GW capacity, focusing on wafers-to-modules, is being built by:
- Waaree Group
- Avaada Energy
- JSW Group
- ReNew Power
- Grew Energy Pvt Ltd
As of now, only Adani Group has a 2 GW wafer and ingot manufacturing facility, which does not benefit from PLI incentives.
Industry Demands and Recommendations
The Indian Solar Manufacturers Association (ISMA) has urged the government to introduce new policy measures to encourage domestic wafer-ingot and polysilicon production. Their recommendations include:
- A fresh capital subsidy program to support new wafer-ingot and polysilicon manufacturing units.
- Priority lending at lower interest rates and dedicated funds for domestic solar capacity expansion.
- Accelerated depreciation benefits for plant and machinery investment.
- Concessional corporate tax rates for new solar manufacturing units.
- Timelines and a roadmap for duty protection against imported polysilicon, ingots, and wafers.
- An ALMM policy extension for ingots, wafers, and polysilicon to ensure they are sourced domestically.
Conclusion
India’s solar industry stands at a crucial crossroads. While progress has been made in panel and cell manufacturing, the absence of ingot and wafer production makes the country vulnerable to import dependencies. Without immediate policy interventions, India’s ambitious solar mission may remain heavily reliant on China. A comprehensive strategy, including subsidies, duty protections, and capital incentives, is essential to create a self-reliant, resilient solar industry aligned with the Atmanirbhar Bharat vision.
