India is preparing a new production-linked incentive (PLI) program to encourage domestic production of polysilicon, one of the most important raw materials used in manufacturing solar panels. The initiative represents another step in India’s effort to reduce dependence on Chinese imports and develop a more complete domestic solar manufacturing ecosystem.
Santosh Kumar Sarangi, Secretary at India’s Ministry of New and Renewable Energy, said in New Delhi on August 7 that the proposed program could support more than 10 GW of polysilicon manufacturing capacity. The government has not yet announced the amount or structure of the incentives.
India has already invested heavily in expanding solar manufacturing. The government previously allocated approximately ₹240 billion ($2.5 billion) in incentives for solar cells and modules. As a result of government support and private investment, India now has approximately 200 GW of module manufacturing capacity and 33 GW of solar cell capacity.
But manufacturing capacity becomes much thinner further upstream. India currently has only about 2 GW of wafer capacity and remains dependent on China for polysilicon.
That imbalance has become increasingly important as India seeks to build an integrated solar supply chain rather than simply assembling imported components into finished modules. The government is also targeting at least 80 GW of domestic ingot and wafer manufacturing capacity by June 2028.
The proposed polysilicon incentives would complement other measures designed to encourage domestic production. India has already introduced approved manufacturer lists for solar modules and cells, and a similar mechanism for wafers is expected in 2028. Together, these policies could gradually shift more of the value created by India’s rapidly growing solar industry to domestic manufacturers. The challenge is economics.
Polysilicon manufacturing requires substantial capital, large amounts of energy and sophisticated technical expertise. According to industry analysts, polysilicon produced outside China currently costs roughly two to three times as much as Chinese material. Unless that cost difference can be narrowed, Indian manufacturers could struggle to compete with imports.
Industry experts argue that India may also need demand-side policies that encourage or require solar manufacturers to purchase domestically produced polysilicon. Without guaranteed demand, new Indian producers could find it difficult to secure customers during their early years, when their production costs are likely to remain higher than those of established Chinese competitors.
Access to raw materials will be another consideration. India’s National Critical Minerals Mission could potentially play a role in helping manufacturers secure the inputs required for large-scale polysilicon production.
The proposed PLI nevertheless signals an important evolution in India’s clean-energy industrial strategy. Earlier policies successfully encouraged rapid expansion of solar module assembly and, increasingly, solar cell production. The government is now turning its attention to the more difficult upstream portions of the value chain.
If India succeeds in establishing competitive polysilicon, ingot and wafer production alongside its rapidly growing cell and module industries, it could develop one of the world’s few large-scale solar manufacturing ecosystems outside China. The key question will be whether government incentives can overcome the significant cost advantages enjoyed by established Chinese suppliers.
