Centre may add subsidy scheme to make Polysilicon

Why in News?

The Ministry of New and Renewable Energy (MNRE) is considering a subsidy scheme to establish at least 30 GW of domestic polysilicon manufacturing capacity by 2030. 

An integrated polysilicon and metallurgical-grade silicon facility is estimated to require approximately ₹850 crore per GW, implying an investment of around ₹25,500 crore. 

What is Polysilicon?

• Polysilicon is an ultra-pure form of silicon, and a critical raw material for most crystalline-silicon solar panels.
• The solar-manufacturing chain involves: Quartz → metallurgical-grade silicon → polysilicon → ingots → wafers → solar cells → modules
• India has rapidly expanded module-assembly capacity but remains substantially import-dependent for upstream materials such as polysilicon, ingots and wafers. This creates a paradox in which a module may be “made in India” while much of its technological and material value is imported. 

Existing Policy Support: 

• The government is already implementing the ₹24,000-crore PLI Scheme for High-Efficiency Solar PV Modules, under which around 48 GW of fully or partially integrated manufacturing capacity has been awarded. 
• Other measures include:
  • Basic customs duty on imported solar cells and modules
  • Domestic Content Requirements in government-supported projects
  • The Approved List of Models and Manufacturers (ALMM); and
  • Extension of ALMM to ingots and wafers from June 2028.

As of March 2026, ALMM-listed capacity had reached around 172 GW for modules and 27 GW for cells. However, listed capacity does not necessarily represent operational production, and the upstream value chain remains comparatively weak. 

Significance of Domestic Polysilicon Production: 

• Energy security: Reduces dependence on geographically concentrated overseas supply chains.
• Manufacturing resilience: Protects solar deployment from trade restrictions, geopolitical tensions and shipping disruptions.
• Higher value addition: Moves India beyond low-value module assembly towards integrated solar manufacturing.
• Strategic autonomy: Solar equipment is becoming as critical to the energy economy as hydrocarbons were to the fossil-fuel economy.
• Employment and technology: Creates capabilities in high-purity chemicals, precision manufacturing, materials science and industrial automation.
• Export potential: An integrated ecosystem can position India as an alternative solar-manufacturing hub.
• Climate targets: Reliable equipment supply is essential for India’s target of 500 GW non-fossil-fuel capacity by 2030.

Major Challenges: 

• Capital intensity: Large upfront investment and long gestation periods may deter private manufacturers.
• Global price competition: Chinese producers possess economies of scale and can supply polysilicon at prices difficult for new Indian plants to match.
• Energy and carbon intensity: Polysilicon purification requires large quantities of reliable electricity. Coal-based production could increase the embedded carbon in Indian solar modules.
• Environmental risks: Manufacturing involves substantial energy, water and hazardous chemicals, requiring strict recycling and pollution-control standards.
• Technology risk: Rapid shifts towards thinner wafers, heterojunction cells, tandem cells and perovskites may change future polysilicon demand.
• Higher solar tariffs: Excessive protection or expensive domestic inputs may increase module prices and slow renewable-energy deployment.
• Demand-offtake mismatch: Around 42 GW of planned renewable capacity reportedly lacks power-sale agreements. Distribution companies increasingly prefer hybrid, storage-backed and round-the-clock power over standalone solar projects.
• Risk of overcapacity: Manufacturing subsidies without corresponding demand, transmission and storage expansion may create underutilised plants.

Way Forward: 

• Provide time-bound, declining support linked to actual production, efficiency and domestic value addition.
• Use competitive bidding instead of open-ended capital subsidies.
• Locate plants near renewable-energy hubs and incentivise the use of green electricity.
• Secure long-term offtake without imposing sudden costs on solar developers.
• Develop indigenous manufacturing equipment, skilled personnel and R&D in next-generation cell technologies.
• Enforce water recycling, chemical recovery and carbon-accounting standards.
• Coordinate manufacturing policy with storage, transmission expansion and financially viable DISCOM procurement.
• Promote export diversification so capacity is not dependent solely on domestic demand.

Domestic polysilicon manufacturing can close the weakest link in India’s solar supply chain. However, genuine self-reliance requires competitive and environmentally sustainable production—not merely subsidised capacity on paper.

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