Toward Solar Independence: India's Quest for Leadership in Solar Cell Manufacturing

India is working towards energy independence and a renewable energy transition, with solar power at the core of this effort. The country targets 280 GW of solar capacity by 2030. To attract investors and maintain steady progress, despite geopolitical challenges, the government is actively promoting domestic manufacturing, especially of solar cell manufacturing.

The government mandates all solar cells used in its projects to be sourced domestically starting from April 1, 2026. This highlights the importance of domestic solar cell manufacturing for the growth of the country’s solar industry and reducing reliance on imports, especially from China. 

While the module manufacturing sector has seen an exponential growth, India is now an appealing destination for solar cell manufacturing investments as well. With the support of government initiatives, both domestic and foreign manufacturers are announcing bold expansion plans in this sector.

This blog explores India's solar cell manufacturing landscape, the challenges it faces, and its future potential.

Policy Efforts Domesticating Solar Cell Manufacturing

To strengthen domestic solar manufacturing and reduce reliance on imports, the Indian government has introduced several measures, including tariffs like basic customs duties (BCD) and non-tariff barriers such as the Approved List of Models and Manufacturers (ALMM) and domestic content requirements (DCR).

Additionally, the government, last year, implemented the Production Linked Incentive (PLI) Scheme for high-efficiency solar PV modules, with a budget of INR 24,000 crore to establish gigawatt-scale domestic manufacturing.

In the first tranche, INR 4,500 crore was allocated for 10 GW of capacity, with 8,737 MW of fully integrated manufacturing units approved. The second tranche, worth INR 19,500 crore, targets 39,600 MW in three phases: 7,400 MW by October 2024, 16,800 MW by April 2025, and 15,400 MW by April 2026. The scheme aims to attract INR 93,000 crore in investments to boost India's solar manufacturing.

ALMM List Inclusion - A Crucial Component for Domestication

ALMM is a non-tariff measure introduced by the Indian government to ensure quality in solar PV products and support domestic manufacturing. Launched in March 2021, it aimed to protect the industry from non-compliant imports, especially from China.

The ALMM was suspended in March 2023, allowing projects commissioned by March 2024 to bypass compliance. It was reinstated on February 9, 2024, effective from April 1, with exceptions for open access and captive power projects. However, on February 15, the ALMM was put on hold again. This inconsistency has worried domestic manufacturers, particularly those without strong export agreements.  

The MNRE has sought feedback on amendments, with a deadline of October 21, 2024. From April 1, 2026, only ALMM-listed manufacturers, all based in India, will be eligible for government-supported projects, with a total capacity exceeding 50 GW.

Importantly, from April 1, 2026, the government will require all solar cells used in projects to be sourced domestically. Until now, module manufacturers could import cells, but this step will mandate the domestic production of both cells and modules for all projects, including open access and commercial and industrial (C&I) consumers. Additionally, since April 1, 2022, a 25 percent basic customs duty has been applied to solar cell imports and 40 percent to solar module imports, further boosting domestic manufacturing efforts.

Solar Cell Manufacturing: Current Scenario

India's solar cell manufacturing capacity has significantly expanded in recent years, driven by various government initiatives. By the end of 2023, the country’s solar module manufacturing capacity grew from approximately 10 GW in 2020-21 to over 60 GW, incorporating advanced technologies like mono PERC, TOPCon, and HJT modules. However, its solar PV cell manufacturing capacity stands at around 7 GW. By 2026, module manufacturing capacity is expected to surpass 150 GW, while cell capacity is projected to exceed 75 GW.

Telangana holds the largest share in solar cell production with 39 percent of the country’s capacity as of December 2023. Gujarat and Himachal Pradesh follow, contributing 34.7 percent and 13.9 percent of the nation’s solar cell capacity, respectively.

This growth has also led to increased exports, with Indian manufacturers exporting around 3,900 MW of solar modules in 2023. This expanding capacity has facilitated backward integration, creating a robust supply chain for domestic solar installations, which are anticipated to reach 30 GW per annum.

Private Players Picking Up the Reins

Many companies have now entered the solar cell manufacturing space, contributing to this growth. For example, Jakson Engineers is investing USD 240 million in a 2.5 GW solar cell plant in Delhi and plans to expand its module capacity to 2 GW in Greater Noida, aiming for 5 GW in cells, wafers, and modules over the next four to five years.

TP Solar, a subsidiary of Tata Power Renewable Energy Ltd (TPREL), has started commercial production at its 2 GW solar cell line in Tirunelveli, making it the largest solar cell and module facility in India. The company also operates a facility in Bengaluru, with a capacity of 682 MW for modules and 530 MW for cells.

Adani Solar, part of the Adani Group, is one of India's biggest vertically integrated solar manufacturers, with 4 GW of capacity for cells and modules and 2 GW for ingots and wafers.

RenewSys, based in Mumbai, is set to produce TOPCon cells at a 1 GW facility by December 2026. As of early 2024, it has 1.85 GW of PV module capacity, including mono PERC, TOPCon, and mono technologies. The company also manufactures 5 GW of encapsulants and 4 GW of backsheet.

Insolation Energy is emerging as a key player, with plans to commission 1.4 GW of PV cell capacity by March next year. The company aims to expand its solar panel production to 4 GW annually and commission 12,000 MT of aluminium framing capacity.

Avaada Group is constructing a 5 GW solar wafer, cell, and module facility in Maharashtra. Once completed, it will produce 5 GW of TOPCon cells and 3 GW of modules, adding to the company’s existing facility in Uttar Pradesh. Avaada plans to expand to 10 GW with backward integration into polysilicon, ingots, and wafers.

Several new projects have been announced recently, driven by changes in solar policy. Alpex Solar is planning a 1.6 GW TOPCon solar cell plant in Uttar Pradesh. Goldi Solar has revealed plans to increase its module and cell production capacity to 14 GW, including a new 4 GW cell plant. Vikram Solar has also filed for an IPO to fund a 6 GW integrated cell and module facility in Tamil Nadu.

China Challenge

India’s strategy for addressing the China challenge is twofold. First, it aims to curb the influx of foreign brands by imposing tariffs and implementing the ALMM, which serves as a barrier to foreign shipments. Second, the government is incentivising local manufacturers to increase their production. As domestic solar cell manufacturing capacity grows, India aims to reduce its reliance on imported materials from China, thereby strengthening its domestic solar panel manufacturing capabilities.

The Indian government’s decision to include solar PV cells in the ALMM is a strategic move to limit Chinese influence in India’s solar manufacturing value chains. China is the world’s largest exporter of solar PV cells, accounting for 94 percent of India’s cumulative solar PV cell imports and 93 percent of module shipments in FY23.

However, China’s dominance began to decline in FY24, with its share of cell and module imports falling to 56 percent and 66 percent, respectively. During April-May FY25, China accounted for 68 percent of solar PV cell and 59 percent of solar PV module imports.

In monetary terms, India imported USD 1.7 billion worth of solar PV cells and modules in FY20, which dropped to USD 571.65 million in the COVID-affected FY21. This figure surged to USD 4.5 billion in FY22 despite pandemic-related challenges but fell to USD 2.25 billion in FY23. A record USD 6.21 billion was imported the following year, with imports standing at USD 551 million during April-May FY25.

Other key exporters to India include Vietnam, Thailand, and Singapore, though their contributions are far smaller than China’s. 

According to a February 2024 report by ICRA, India’s efforts to scale up domestic module manufacturing over the past year are expected to improve the availability of modules from local OEMs. However, the sector remains dependent on imports, particularly for solar PV cells and wafers, due to India's limited cell manufacturing capacity and the absence of domestic wafer production.

Risks and Challenges for Domestic Solar Sector

Despite efforts to boost India's solar manufacturing, several challenges still limit its growth and global competitiveness. While solar module capacity is increasing, production of key components like solar cells, polysilicon, wafers, and ingots remains insufficient. This heavy reliance on imports, mainly from China and Southeast Asia, exposes India to supply chain risks and could slow its solar deployment goals as global demand rises.

Limited access to affordable technology for mining and processing critical minerals further hampers solar cell and module production. Dependence on foreign technology often leaves Indian products three to five years behind global advancements, making it difficult to compete.

Inconsistent policies, particularly around the ALMM, have added to the confusion. The impact of the Production Linked Incentive (PLI) scheme is still unclear, as Indian manufacturers struggle with high production costs compared to China, which benefits from lower energy costs, government incentives, and efficient logistics. High grid tariffs and unstable electricity in India further hinder operations.

While domestic manufacturers welcomed basic customs duties on imports, developers face higher costs and often find imported modules cheaper and better in quality. The Domestic Content Requirement (DCR) mandates over 36 GW of solar cells and modules under various schemes, but slow progress from Central Public Sector Undertakings (CPSUs) remains a concern.

Other obstacles include land acquisition, grid integration, quality control, skilled labour shortages, raw material price volatility, trade disputes, policy uncertainty, financing challenges, and lack of global competitiveness. Together, these issues obstruct sustained growth and global relevance for India’s solar manufacturing sector.

The way forward

As India progresses towards self-reliance in solar manufacturing, it must prioritise the development of globally competitive products, expand its international reach, and position itself as a dependable alternative for markets looking to diversify supply chains and enhance resilience against global disruptions. To sustain growth and attract investment, the government needs to provide a stable and predictable policy framework.

With the right policy measures and support, India can not only achieve self-reliance but also capitalise on export opportunities—a trend that is already emerging. However, to reach these objectives, addressing existing challenges promptly is crucial. The recent advancements in solar cell manufacturing and other components signal progress in overcoming hurdles and reducing India’s dependence on foreign markets, paving the way for sustained growth in the sector.