An Investor’s Guide to Solar Manufacturing in India

Foreign firms investing in solar manufacturing in India benefit from PLI incentives, protective customs duties, and strong export demand as the country targets 500 GW renewable capacity by 2030.

Market and capacity landscape

India’s solar manufacturing sector is scaling at great speed. Solar module capacity has doubled from 38 GW in March 2024 to 74 GW in March 2025. Solar Photovoltaic (PV) cell manufacturing capacity tripled during the same period to reach 25 GW. According to a report by SolarPower Europe, India’s solar cell manufacturing capacity is projected to grow to 120 GW and 160 GW of module manufacturing capacity by 2030.

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The foundation of India’s solar expansion lies in the central government’s target of achieving 500 GW of non-fossil fuel capacity by 2030. The Union Budget 2025 has earmarked INR 242.24 billion (US$2.7 billion) for the solar sector to achieve this end.

India’s position as a solar manufacturing hub is also tied to the Make in India program, which puts emphasis on domestic production of critical inputs and goods. The central government has also announced a roadmap to build 40 GW of wafer capacity by 2027 and to develop polysilicon production capabilities, areas where India currently has no prominent presence.

Policy framework and government support

Production Linked Incentive (PLI) Scheme

The PLI Scheme for High Efficiency Solar PV Modules offers production-based incentives for five years after commissioning and has an allocation of INR 240 billion (US$2.7 billion).

• Tranche I awarded 8.7 GW of fully integrated module capacity to Reliance Industries, Adani New Industries, and Shirdi Sai Electricals.
• Tranche II granted awards to 11 firms for 39.6 GW of integrated or partially integrated units.

By June 2025, the scheme enabled 18.5 GW of solar module capacity, 9.7 GW of cell capacity, and 2.2 GW of ingot-wafer capacity. Its focus is to improve quality control in solar manufacturing and reduce reliance on imports to avert supply chain risks.

Source: PV Magazine

GST reduction

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From September 22, 2025, the goods and services tax (GST) rate on solar equipment will be cut from 12 percent to 5 percent. The reduction applies to modules, cells, and related renewable devices, which will see lower capital costs of projects by about five percent. For developers, this translates into an estimated 10 paise (US$0.00011) per unit reduction in solar power generation costs.

Read more: India’s GST Overhaul: What Goods Become Cheaper and What Gets Costlier

Approved list of models and manufacturers

India requires government-backed projects to use only firms listed in the Approved List of Models and Manufacturers (ALMM). From just 2.3 GW of listed module capacity in 2014, the ALMM list had expanded to 100 GW by August 2025, covering more than 100 manufacturers across 123 facilities. In June 2026, a second list of ALMM will take effect for solar cells.

Although the ALMM framework helps domestic suppliers, its intermittent suspension and reinstatement have caused concern for both developers and manufacturers.

Domestic content mandate

India has tightened its Domestic Content Requirement (DCR) rules. As of March 2025, crystalline-silicon cells count as locally made only if they are produced in India using undiffused silicon wafers. Cells from imported diffused wafers do not qualify for DCR. And from June 2026, all projects must source both modules and cells domestically. The objective is to curb imports, especially from China, and to support upstream investment in wafers and ingots.

Foreign direct investment (FDI) policy

India allows 100 percent FDI in renewable energy generation and distribution through the automatic route, without prior government approval. Solar manufacturing is part of this liberal FDI policy and thus makes India one of the most open global markets for foreign capital in renewables.

Tariff adjustments

Import tariffs remain an important tool to encourage domestic production for central government. Under the 2025 budget:

• Basic Customs Duty (BCD) on solar cells was reduced from 25 percent to 20 percent, with an additional 7.5 percent Agriculture Infrastructure and Development Cess (AIDC) and 2.5 percent Social Welfare Surcharge (SWS); and
• BCD on modules fell from 40 percent to 20 percent, but an additional 20 percent AIDC and 4 percent SWS still apply.

Leading investment examples

A mix of domestic conglomerates and foreign partnerships are becoming part of India’s solar supply chain:

• Reliance Industries is commissioning a 20 GW solar giga-factory by the end of FY 2025-26. It would integrate modules, cells, wafers, ingots, polysilicon, and glass.
• Waaree Energies operates 16.7 GWp of module capacity and 5.4 GWp of cell capacity across five sites, with an additional 5.4 GW cell plant under construction in Gujarat.
• Solex Energy has announced a US$1 billion expansion plan by 2030, scaling from 700 MW to 1.5 GW capacity.
• HVR Solar is building a 2 GW advanced module facility in Haryana using TOPCon technology.
• SAEL Solar is investing INR 82 billion (US$929.1 million) in a 5 GW cell and 5 GW module solar park in Uttar Pradesh.

Foreign firms are also investing directly or via joint ventures in India’s solar manufacturing industry. Hyderabad based company Premier Energies has partnered with Taiwan’s Sino-American Silicon Products in a 74:26 joint venture to establish a 2 GW wafer facility.

Supply chain and raw material challenges

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Despite strong demand, India remains heavily dependent on imports for upstream components. Globally, China controls between 75 percent and 95 percent of the solar PV supply chain, including 91 percent of polysilicon and more than 97 percent of wafers. India still imports nearly 80 percent of its solar equipment, with over 60 percent coming from China.

In FY 2024-25, imports for the solar sector reached US$7 billion, with US$3.89 billion sourced from China. Yet, there are signs of diversification in the making. China’s share of solar cell imports dropped from more than 90 percent in FY 2022-23 to 56 percent in FY 2024-25. India is pushing to build its domestic capacity with state-led incentives, although self-reliance remains distant in upstream portion of solar supply chain.

Compliance and certification requirements

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For foreign companies, understanding the local compliance requirements is important for market entry:

• BIS certification: Solar panels sold in India must comply with the Bureau of Indian Standards (BIS) under the Compulsory Registration Scheme. The companies need to undergo laboratory testing, factory inspection, and periodic audits. The BIS license needs four things: manufacturer (importers can apply as an Authorized Indian representative), manufacturer address, product type, and trademark of the brand.
• ALMM registration: The Approved List of Models and Manufacturers is mandatory for government-backed projects. From June 2026, List-II covering solar cells will also be required.
• Product standards: Modules also need to adhere with IS 14286:2010 for performance and IS 61730 for safety.

Entry routes and investment structures

Foreign investors can enter India’s solar sector through multiple channels. As we have seen, the FDI policy permits up to 100 percent foreign equity via the automatic route, covering both manufacturing and project development. This means no prior government approval is required for most ventures.

Common entry structures are:

• Wholly owned subsidiaries, which are favored by companies aiming for direct control over production.
• Joint ventures, especially in upstream portions like wafers and cells where domestic capabilities are limited but regulations require local production.
• Technology partnerships, which allows foreign firms to supply equipment and know-how, and leverage Indian partners for compliance and distribution.

In 2022, Amp Energy made a joint venture with Websol for 1.2 GW cell and module production, and in 2025, Micromax Informatics is collaborating with China’s Jinchen for a 5 GW module line.

Export opportunities

India’s solar exports have grown dramatically, rising 23-fold from FY 2022-23 to FY 2024-25 to reach about US$2 billion. The US accounts for more than 97 percent of India’s solar exports, followed by Europe (Germany, Netherlands, Spain), the UAE, Vietnam, and Brazil.

India currently holds a 3.8 percent share of global solar module exports. Given rising demand in Africa and the Middle East, firms based in India have the potential to expand their footprint beyond traditional markets. Export prospects are especially attractive for companies that can manufacture in India and integrate their unit into the global supply chain to benefit from lower costs and preferential trade routes.

Risks and operational challenges

Despite the growth story, companies choosing to tread the Indian market and set up manufacturing face several challenges:

• Supply chain concentration: India continues to rely on imported wafers and polysilicon which exposes firms to global price volatility.
• Certification bottlenecks: BIS and ALMM compliance can delay time-to-market for new entrants.
• Policy uncertainty: Changes in tariffs or procurement rules have historically caused disruptions for both developers and manufacturers.
• Logistics and infrastructure gaps: India’s distribution costs for core manufacturing sectors remain high, especially for projects in remote areas, which adds pressure to firm’s margins.

Outlook

India’s solar manufacturing industry is an attractive bet for foreign players. India offers a domestic market with increasing appetite for sustainable and renewable, favorable government incentives, and easy export routes to under tapped markets. If India could successfully integrate itself into up and downstream global supply chain and shield itself from tariff uncertainties, investors can expect a bag of immediate opportunities and long-term positioning in a sector central to both India’s energy transition and global decarbonization.

Foreign firms can use professional help to explore the potential of Indian market, navigate certification requirements, or enter in a joint venture with local company. For business inquiries, reach our experts at: India@dezshira.com

(US$1 = INR 88.45)

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