We measure THz-induced change in refractive index of similar to 5x10(-3) in high resistivity silicon at 800 nm which indicates generation of high density of free carriers. The change in refractive index increases by more than 30 times with high initial carrier density set by optical excitation compared to optically unexcited sample showing strong dependence of carrier generation on initial carrier density. The high change in refractive index of silicon shows that THz excitation has a potential to be an alternative mechanism for optical modulation based on carrier induced dispersion for future ultrafast silicon-based modulators.