MNRE and Finance Ministry Explore Capex Relief for Upstream Solar Manufacturing
The Ministry of New and Renewable Energy (MNRE) and the Ministry of Finance are actively engaged in discussions to formulate a new capital subsidy scheme specifically designed for the upstream segments of solar photovoltaic (PV) manufacturing. This initiative aims to address the persistent challenges faced by industries involved in polysilicon refining, as well as ingot and wafer production.
Addressing Upstream Manufacturing Hurdles
MNRE Secretary Santosh Kumar Sarangi highlighted that while the manufacturing of solar modules and cells has progressed satisfactorily, the upstream segments continue to encounter significant obstacles. These challenges primarily stem from the high capital intensity required for such operations and the intense price competition from Chinese manufacturers, which exerts considerable pressure on market prices.
"We are now trying to advocate a slight tweak in the way in which support could be provided to these kinds of industries," Sarangi stated, confirming that detailed discussions on the proposal are currently underway with the Finance Ministry.
Existing PLI Scheme and Its Limitations
The current Production Linked Incentive (PLI) scheme for high-efficiency solar PV modules encompasses both upstream and downstream manufacturing stages. However, progress has been notably slower in the upstream areas, including polysilicon refining and the production of ingots and wafers.
Sarangi pointed out that polysilicon manufacturing is an extremely electricity-intensive process, requiring substantial efforts to secure low-cost power sources. "Since it involves a huge capital expenditure to set up this kind of industry, a capex subsidy would be desirable," he explained. The proposed scheme would focus on providing capital expenditure support for polysilicon and ingot-wafer projects that were sanctioned under the PLI but have struggled to commence operations due to various constraints.
Current Manufacturing Capacity and Import Dependency
India's solar PV cell manufacturing capacity stands at approximately 27 gigawatts (GW), while the installed capacity for ingot and wafer manufacturing is around 2 GW. Notably, there is currently no commercial production of polysilicon within the country.
The Ministry has informed Parliament that while domestic solar PV module manufacturing capacity is adequate to meet local demand, the upstream stages—such as solar cells, wafers, and polysilicon—rely heavily on imports due to insufficient domestic production capabilities. Data from the Department of Commerce's Export-Import Data Bank reveals that imports of solar PV cells, wafers, and polysilicon during FY25 were valued at approximately $1,641 million, $156 million, and $0.03 million, respectively.
PLI Scheme Overview and Performance
Launched in March 2021, the PLI scheme for solar PV modules aimed to establish 65 GW per annum of fully and partially integrated manufacturing capacity. Initially backed by an outlay of Rs 4,500 crore, the scheme received an additional allocation of Rs 19,500 crore in 2022, bringing the total sanctioned outlay to Rs 24,000 crore across two tranches.
According to MNRE, the installed solar PV module manufacturing capacity in India, as per the Approved List of Models and Manufacturers (ALMM), is 121.7 GW, which includes 26.6 GW capacity under the PLI Scheme for high-efficiency Solar PV Modules.
Implementation Gaps and Sectoral Disparities
A joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research, released in December 2025, indicates that the operationalisation of PLI-awarded facilities has exposed significant implementation and execution gaps. While downstream segments like module assembly have shown considerable progress, upstream segments such as wafer and polysilicon manufacturing have lagged behind.
The report further notes that about 36% of India's total cell capacity and 24% of module capacity originate from PLI allocations. As of June 2025, the overall operational capacity achieved under the solar PLI scheme was approximately 29% of the total awarded capacity. Module assembly exhibited the highest capacity-achievement rate at 59%, reflecting stronger advancement in downstream manufacturing. In contrast, the achievement rates for cell manufacturing (22%), wafer-ingot manufacturing (10%), and polysilicon manufacturing (14%) were markedly lower, underscoring the persistent barriers to upstream capacity realisation.
