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India Considers $1Bn Subsidy to Boost Solar Manufacturing: Will It Reduce Dependence on China?

The $1 billion subsidy plan aims to boost India's solar manufacturing but full independence from China may take years

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Solar PV Panel Photo: by freepik
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India is finalising a $1 billion capital subsidy plan to bolster its solar manufacturing industry as part of the broader effort to reduce dependence on China and profit from the global energy transition, reported Bloomberg.

Proposed by the Ministry of New and Renewable Energy, the plan will target domestic makers of wafers and ingots, one of the weakest segments of India’s solar industry. According to Bloomberg, the plan is expected to be presented to the cabinet for approval in March and has the backing of the top advisers in Prime Minister Narendra Modi’s office.

Ongoing Dependence on China

A report by Global Trade Research Initiative (GTRI) published in October 2024 said that India, like the US and European Union (EU), is heavily reliant on China for its solar industry currently, posing a risk to nation’s energy security.

Even if India produces solar cells domestically, the reliance on China and other countries to import silicon wafers, raw materials and equipment for making solar cells and modules will not be entirely eliminated, reported The Print.

Also, China’s export curbs on critical equipment for solar production, introduced in January, make it even more challenging for new cell manufacturing units to thrive in India, reported Business Standard.

According to CRISIL Market Intelligence and Analytics report, Sehul Bhatt, director-research at CRISIL Market Intelligence and Analytics said that import dependency will continue for everything from polysilicon to wafer even if local production for cells take off, adding that the import of wafers will increase in the next few years, as reported by The Print.

“To cut down on imports, India needs to produce solar cells starting from silica refining, which involves costly and energy-intensive polysilicon production and requires advanced technology,” suggested the GTRI report. It also said that currently, there is no Indian company that produces solar cells from scratch using silica sand to make wafers, reported The Print. Adani Solar became India’s first-ever ingot producer in April 2024, using imported polysilicon.

The GTRI report also warned that if India’s solar production capacity does not increase, the import reliance could reach up to $30 billion annually by 2030.

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