Moreover, in Q1 2025, India installed 5.93 GW of utility-scale solar, 1.34 GW of rooftop solar, and around 1.87 GW of wind capacity, highlighting the quarter-on-quarter momentum.

What sets India’s solar ecosystem apart is the increased corporate participation in the C&I (commercial & industrial) segment. Many companies are actively pursuing green energy transition targets under their ESG mandates. The result has been a boom in open access solar installations, especially in industrial belts of Maharashtra, Gujarat, and Karnataka.

Accelerating module manufacturing capacity
India’s module manufacturing capacity has grown from ~7 GW in FY2020 to nearly 70 GW as of March 2024, according to a CareEdge Ratings report. This is expected to touch 80 GW in the next 2–3 years, supported by an estimated capex of Rs 120 billion. However, high-efficiency modules constitute only 50 GW of this capacity.

Raman Bhatia, Founder & MD, Servotech Renewable Power System Ltd, observes, “India’s solar manufacturing value chain has made commendable progress in recent years. However, challenges like dependency on imports, limited R&D, and underutilised production capacity still limit the sector’s global competitiveness. We believe that with strong policy backing and technological advancement, India can reduce its reliance on imports and emerge as a global solar manufacturing leader, driving both economic and environmental impact.”

Implementation of the ALMM-I (Approved List of Models and Manufacturers) from April 1, 2024, has increased domestic demand. Exports have grown too—India’s module exports touched $ 1.97 billion in FY24, driven primarily by US demand under the Uyghur Forced Labor Prevention Act (UFLPA) policy that restricts Chinese imports.

Gautam Mohanka, CEO, Gautam Solar, states, “India has a clear opportunity to establish itself as a reliable and competitive player in the global solar supply chain. With growing geopolitical alignment, particularly with markets like the US looking to diversify sourcing away from China, Indian manufacturers can seize export opportunities by focusing on high-efficiency modules, transparent business practices, and quality consistency.”

Domestic manufacturers are increasingly focusing on international markets, especially the US, where margins are 2–3 times higher than in India. As per JMK Research, in Q1 2025, 12.5 GW of modules were shipped by 24 players, with the top five accounting for 51 per cent share. Exports in this quarter included ~572 MW of modules, with companies like Adani and Waaree doubling their export volumes over the previous quarter.

Efforts are also underway to improve backward integration. Several manufacturers are investing in glass, junction box, EVA films, and frame production to ensure better control over costs and supply chain resilience.

Table 1: India’s global imports of solar cells/modules ($ million-FY 2024)

Source: Ministry of Commerce data; Courtesy: GTRI

“We see strong progress in India’s solar manufacturing landscape, particularly in modules and increasingly in cell production. However, early stages of the solar production cycle, such as polysilicon production and wafering, remain underdeveloped. These areas need significant investment and technical skills. The lack of domestic infrastructure for these critical inputs continues to be a major challenge in building a self-reliant solar ecosystem. Despite the rapid growth in module manufacturing capacity, India still heavily relies on imports for solar cells, wafers, and polysilicon,” opines Mohanka.

According to a Crisil Ratings report, solar cell capacity is projected to rise from 10 GW in FY2024 to 50–55 GW by FY2027. This expansion will involve Rs 280-300 billion in capex, with 70 per cent funded via debt. The move aligns with the ‘Make in India’ vision and policies aimed at reducing import dependence.

“To boost domestic demand and cell making capacity, the government has mandated use of cells only from its approved list of cell manufacturers (ALCM) in open access and net metering projects and projects where it is either providing funding assistance or acting as a counterparty. Among other measures, the Production-Linked Incentive (PLI) scheme and domestic content requirement, too, will invigorate local manufacturing. All these have led to cell capacity expansion announcements of 45-50 GW, which will take India’s overall cell making capacity to ~55 GW over the next two fiscals,” said Ankit Hakhu, Director, Crisil Ratings, in the report.

The government's planned implementation of ALMM-II by June 2026 will mandate use of domestic cells in key projects. This is expected to significantly increase the share of domestically manufactured modules backed by Indian-made cells—from 15 per cent in FY2024 to over 50 per cent by FY2027, says Crisil.

Crisil also estimates that the proportion of module cost captured domestically can rise from 40–50 per cent to 70–80 per cent with domestic cell integration. The expansion will also be manageable from a financial standpoint, with capex intensity expected to remain at 1.3–1.5x over the next three years, supported by robust operating margins.

The investment interest is further substantiated by the entry of conglomerates such as Reliance, Adani, and Tata Power into the full solar value chain, including cell manufacturing, which indicates long-term confidence in India’s solar trajectory.

However, Ajay Srivastava, Founder of Global Trade Research Initiative (GTRI), noted in GTRI’s October 2024 report, that domestic manufacturing in India remains heavily dependent on imported inputs like wafers and polysilicon, largely sourced from China and Southeast Asian nations. “Unless we build from the silica stage onward, India will only add 15 per cent value domestically,” he states.

Challenges in scaling up manufacturing
India’s solar manufacturing journey shows promise, but critical challenges persist. According to the GTRI report, the global solar supply chain remains heavily dependent on Chinese imports—and India is no exception. China currently accounts for 97 per cent of global polysilicon production and 80 per cent of solar module manufacturing. Even countries like the US and EU indirectly rely on Chinese inputs via imports from Vietnam, Malaysia, and Thailand.

India's key weakness lies in its limited manufacturing depth. Most domestic units are focused on end-stage module assembly, with minimal capacity to convert raw silica into wafers or polysilicon. GTRI estimates that 90 per cent of India’s solar manufacturing involves assembling modules from imported cells, contributing only about 15 per cent in domestic value addition.

In FY2024 alone, India imported solar equipment worth $7 billion—including $4.4 billion in modules, $1.9 billion in cells, and $1 billion in ancillary parts. China accounted for over 62 per cent of these imports. Without significant upstream integration, India’s solar import bill could escalate to $30 billion annually by 2030.

Manufacturing costs for domestic cells are currently 80–90 per cent higher than imports, due to smaller economies of scale and dumping by Chinese producers. This cost differential has raised concerns among project developers about escalating project costs.

Moreover, issues such as capital equipment shortages, lack of skilled labour, and underdeveloped supply chains—especially in polysilicon and wafer production—pose further challenges. According to CareEdge Ratings, the capex needed for integrated supply chains (including ~40 GW wafer and ~25 GW polysilicon capacity) is around Rs 550 billion.

“The solar equipment manufacturing sector has several tailwinds including healthy domestic demand prospects, rising export opportunities, proactive policy support, and improved lenders’ appetite for RE projects. However, lack of integrated solar equipment capacity, supply chain dependence on China, increasing competitive intensity, and delay in RE capacity additions due to systemic issues are some headwinds that remain monitorable over the medium term,” stated Jatin Arya, Director, CareEdge Ratings, in the report.

There is also a pressing need for domestic R&D to match global standards in cell efficiency and degradation rates. Technological gaps remain a key bottleneck for Indian manufacturers aiming to compete with Chinese and Southeast Asian suppliers.

Impact of ALMM and PLI Schemes
The Indian government has used both tariff (Basic Customs Duty—25 per cent on cells, 40 per cent on modules) and non-tariff barriers (ALMM) to push domestic manufacturing. While global module prices have dropped significantly—almost halving from March 2022 to September 2024—ALMM-I implementation has ensured steady demand for Indian modules. ALMM-II, mandating domestic cells, could temporarily increase solar tariffs. However, long-term benefits include greater self-reliance and cost stabilisation through economies of scale.

Figure 2: ALMM enlisted module manufacturing capacity 

Source: MNRE, Industry Sources, CareEdge Ratings

Mohanka observes, “The challenges of upstream integration stem from economic, technological, and logistical issues. Producing polysilicon and wafers requires significant investment, access to clean energy, technical expertise, and guaranteed customers. India should take a strategic approach by creating dedicated solar industrial zones, improving the business environment, encouraging global technology partnerships, and offering risk-sharing options. Government programs like the PLI are a good start, but focused execution and readiness of infrastructure are crucial.”

According to CareEdge report, total capex across modules (~Rs 120 billion), cells (~Rs 300 billion), wafers (~Rs 400 billion), and polysilicon (~Rs 15,000 crore) is expected to cross Rs 1 lakh crore. Nearly Rs 700 billion will likely be funded through debt, indicating strong lender confidence in the sector.

The phased PLI implementation has also led to better geographical spread of solar manufacturing clusters, with states like Gujarat, Rajasthan, Tamil Nadu, and Andhra Pradesh emerging as preferred destinations due to infrastructure, port connectivity, and proactive state-level policies.

While the PLI scheme and the ALMM framework are steps in the right direction, GTRI argues they are insufficient unless expanded to support early-stage manufacturing. “The PLI scheme must extend beyond modules and cells to include polysilicon, ingots, and wafers,” says Srivastava.

India’s customs duties (on modules & cells) have boosted local interest, but are offset by duty-free imports from ASEAN countries under FTA provisions. Moreover, lack of large-scale R&D investment and limited skilled workforce remain serious bottlenecks.

China dominates the global solar manufacturing supplies by creating global overcapacity—it produces 1.45 million metric tonnes of polysilicon in 2024 (sufficient for 700 GW of modules) far exceeding expected global installations of 592 GW. This has caused a 40–50 per cent crash in prices, making global solar manufacturing outside China uncompetitive. “India, along with the US and EU, must build alternative global supply chains. Solar self-reliance is not just an energy issue—it’s a strategic imperative,” affirms Srivastava.

A self-reliant and export-oriented India
India’s solar equipment manufacturing sector is on the verge of becoming globally competitive. Modules of 12.5 GW were shipped in Q1 2025 alone by India’s top 24 players. Export growth—especially to the US—continues to provide better margins and has reduced overdependence on the domestic market.

“India is emerging as a strong alternative to China in the global solar supply chain. The ongoing US-China trade tensions present a significant opportunity for Indian manufacturers to expand into new markets. This is a moment to position India as a credible, reliable source for high-quality solar products globally,” opines Bhatia.

Table 2: USA’s imports of solar cells/modules ($ million-CY 2023)

Source: Comtrade data; Courtesy: GTRI

The expected module requirement in India is 40–50 GW annually. With upcoming capacity of ~80 GW modules and ~60 GW cells, India is likely to become a surplus market. This reinforces the need for Indian manufacturers to focus on exports and cost efficiencies.

Mohanka says, “To effectively increase exports, we need ongoing government support such as PLI scheme, export facilitation policies, and faster infrastructure development. It is also essential to ramp up domestic solar cell manufacturing. Reducing dependence on imported cells will directly improve our cost competitiveness in global markets. Stable policy frameworks and support for R&D and automation will also be key factors.”

The market is also becoming more consolidated. In CY2024, the top five module makers contributed over 50 per cent of market share. Players like Tata Power Solar, Mahindra Solarize, and Amplus led in rooftop installations, while Adani and ReNew dominated utility-scale PPAs.

The future also holds promise in emerging technologies. Indian players are beginning to explore TopCon and HJT cell technologies, which offer higher efficiency and durability. Government support through R&D grants and technology parks can further boost India's competitiveness.

India’s potential to become a global solar powerhouse depends on resolving short-term execution challenges while continuing to build long-term cost advantages and export capabilities. With the right enablers, India could play a pivotal role in the global clean energy transition.

“To ensure long-term leadership, the government must focus on strengthening domestic supply chains, increasing R&D incentives, offering export subsidies, and fast-tracking infrastructure development. Consistent policy support, ease of doing business, and collaborative industry–government frameworks will be key to transforming India into a global solar manufacturing powerhouse over the next 3–5 years,” observes Bhatia.

India’s solar manufacturing ecosystem is undergoing a structural transformation, backed by robust policy support, increasing global demand, and a solid investment pipeline. The next three years are critical. If infrastructure bottlenecks are resolved and export competitiveness is maintained, India can not only become self-reliant but emerge as a global hub for solar manufacturing.

Mohanka states, “By 2030, we envision India becoming a major player in solar manufacturing, not just in scale but also in technology leadership. With the government targeting 500 GW of renewable energy, domestic manufacturing capacity is expected to expand rapidly, including vertical integration from wafers to modules.”

India’s solar ambitions cannot rely solely on downstream assembly. True Atmanirbharta demands the development of a fully integrated solar manufacturing ecosystem—spanning the entire value chain from silica to silicon, and wafers to finished modules. With China setting the pace on global pricing and supply access, India must prioritise collaborative investments, strategic policy reforms, and robust manufacturing transformation. The real challenge lies not just in expanding production capacity, but in advancing technological expertise. Only then can India position itself as a global leader in solar manufacturing—not merely as an assembler.

References:

Quotes
Ajay Srivastava, Founder, GTRI
Domestic manufacturing in India remains heavily dependent on imported inputs like wafers and polysilicon, largely sourced from China and Southeast Asian nations. Unless we build from the silica stage onward, India will only add 15 per cent value domestically.

Gautam Mohanka, CEO, Gautam Solar
India should take a strategic approach by creating dedicated solar industrial zones, improving the business environment, encouraging global technology partnerships, and offering risk-sharing options.
Raman Bhatia, Founder & MD, Servotech Renewable Power System Ltd