A significant industrial shift is underway in India’s renewable energy sector, with domestic solar equipment manufacturers pledging an estimated ₹30,000 crore (approximately $3.6 billion USD) investment to dramatically scale up solar cell production. This concerted effort aims to establish around 50 gigawatts (GW) of new solar cell capacity by the next financial year (FY27), a strategic move to align with stringent local sourcing mandates introduced by the government. Leading the charge are prominent players such as Waaree Energies, India’s largest solar module manufacturer, alongside conglomerates like Adani Solar, Reliance Industries Ltd, ReNew Energy Global plc, and private equity-backed entities like Avaada Group and Premier Industries. This ambitious expansion is poised to fundamentally reshape India’s solar supply chain, significantly reducing its historical reliance on imports, particularly from China, and fortifying its energy independence agenda.
The impetus behind this substantial capital outlay is a critical new government regulation, the Approved List of Models and Manufacturers (ALMM), which is set to come into effect this June. This policy mandates that solar cells utilized in government-supported schemes and projects, as well as those from which distribution companies procure electricity, must exclusively originate from manufacturers listed on the ALMM. This measure is a cornerstone of India’s broader strategy to cultivate an indigenous solar manufacturing ecosystem, ensuring quality control, promoting domestic technological prowess, and mitigating geopolitical supply chain risks. The policy arrives as India embarks on an aggressive trajectory to add 50 GW of renewable energy capacity annually, targeting an overarching goal of 500 GW by 2030, a cornerstone of its commitment to global climate action and sustainable economic growth.
Currently, India possesses a robust solar module manufacturing capacity, estimated at 160 GW. However, this impressive figure masks a critical vulnerability: the domestic production of solar cells, the core component of modules, stood at only about 30 GW at the beginning of 2026. This stark disparity has historically necessitated substantial imports of solar cells to meet the burgeoning demand from module assemblers and project developers. The planned ₹30,000 crore investment is earmarked precisely to bridge this gap, with industry projections indicating that the nation’s cell manufacturing capacity could surge from its current 30 GW to an estimated 45 GW by the end of FY26, and potentially reach an impressive 95 GW by the conclusion of FY27, assuming all planned expansions materialize. The capital expenditure required for establishing 1 GW of solar cell manufacturing capacity is approximately ₹600 crore ($72 million USD), highlighting the massive scale of the proposed investments.
The solar manufacturing value chain is complex, starting with polysilicon, which is cast into ingots. These ingots are then sliced into thin wafers, which are processed into solar cells, and finally, multiple cells are assembled into modules. China has long dominated nearly every segment of this value chain, from polysilicon and ingot production to wafers and cells, making it a critical choke point for global solar supply. India’s strategic pivot aims to address this vulnerability by fostering an integrated domestic supply chain. Major industry players are outlining aggressive expansion plans: Waaree Energies is targeting an estimated 15.4 GW cell capacity by FY27, Adani Solar aims for 10 GW, Premier Industries for 10.6 GW, ReNew Energy for 6.4 GW, and Avaada Group for 6 GW. These figures underscore the industry’s commitment to meeting the ALMM requirements and capitalizing on the domestic market opportunity.
Industry leaders are vocal about their readiness. Vinay Rustagi, Chief Business Officer of Premier Energies, affirms the industry’s preparedness for the June ALMM implementation, projecting a cumulative cell manufacturing capacity of approximately 50 GW. He also noted that certain renewable energy projects auctioned prior to December 2024 have been granted exemptions from the ALMM rule to ensure a smooth transition. Premier Energies itself is rapidly expanding its cell manufacturing capacity from 3.6 GW to 10.6 GW within the next six to seven months. Similarly, Prashant Mathur, CEO of Saatvik Green Energy Ltd, revealed plans to commission 2.4 GW of solar cell capacity at their new Odisha facility by mid-FY27, marking the first phase of an integrated expansion. This move, he explains, will differentiate "true manufacturers" from mere assemblers in the industry, enhancing India’s self-reliance.
Further solidifying this trend, Nasdaq-listed ReNew Energy Global Plc recently secured a $100 million investment from British International Investment (BII) to bolster its solar manufacturing ambitions. ReNew Photovoltaics, its module manufacturing arm, already operates a 6.4 GW module facility in Jaipur and a 2.5 GW solar cell facility in Dholera, Gujarat. The BII investment is earmarked for the construction of a cutting-edge 4 GW TOPCon cell facility in Dholera, which will elevate ReNew’s total cell manufacturing capacity to 6.4 GW, mirroring its module capacity. Reliance Industries Ltd (RIL) is another formidable entrant, having recently commissioned its 10 GW heterojunction-based solar cell manufacturing facility in Jamnagar, demonstrating a clear commitment to advanced cell technologies.
Despite the robust domestic push, the "China factor" remains a significant, albeit evolving, challenge. For years, India’s government has supported the solar ecosystem through mechanisms like the Production Linked Incentive (PLI) scheme and high basic customs duties—40% on modules and 25% on cells—aimed at fostering self-reliance. However, the initial rollout of the ₹19,500-crore PLI scheme encountered hurdles, including Chinese supply constraints and difficulties in obtaining visas for Chinese technicians, which are crucial for setting up advanced manufacturing lines. While the scheme has been extended until 2027 and a recent diplomatic thaw between India and China has somewhat eased these operational challenges, deep-seated structural concerns persist.
Industry executives acknowledge that despite the domestic drive, Indian manufacturers and even other global players will likely remain dependent on China for critical sub-components like wafers, ingots, and polysilicon in the near to medium term. Backward integration beyond cells, into these upstream segments, is deemed essential for true independence. Sankalp Gurjar, an assistant professor of geopolitics and geoeconomics at the Gokhale Institute of Politics and Economics, emphasizes that while both nations seek a "functional relationship," fundamental trade imbalances and geopolitical tensions persist. This reinforces India’s strategic imperative to reduce import dependence on China in vital sectors like solar energy. Recent market volatility, such as China’s tightening of wafer export quotas in December 2025, led to surges in solar cell and module prices, underscoring the fragility of external dependencies.
Beyond the China challenge, India’s renewable energy sector faces internal operational issues. Approximately 43 GW of renewable power capacity remains uncontracted, and significant power curtailment occurs daily in states like Rajasthan and Gujarat due to inadequate transmission infrastructure. This highlights the need for a holistic approach that integrates manufacturing growth with grid modernization and demand-side management.
The rapid expansion of solar module manufacturing, which often involves assembly rather than deep integration, has also triggered concerns about a potential supply glut. The Union Ministry of New and Renewable Energy (MNRE) has cautioned banks and non-banking financial companies (NBFCs) against unregulated lending to solar module making companies. In December 2025, the MNRE advised financial institutions like PFC, REC, and IREDA to adopt a calibrated approach to financing, urging them to diversify their portfolios beyond just module facilities to include upstream stages like solar cells, ingots-wafers, and polysilicon, as well as ancillary components such as solar glass and aluminum frames. Ratings agency ICRA, in a November report, projected that India’s annual solar module production (60-65 GW) is expected to outpace annual installations (45-50 GW direct current), potentially leading to industry overcapacity. ICRA further estimated that India’s cell manufacturing capacity could reach 100 GW by December 2027, reinforcing the need for strategic investment across the value chain.
Recognizing the critical gaps in upstream manufacturing, the Indian government has also proposed extending the ALMM’s ambit to wafers by June 2028. This move is designed to further incentivize domestic production of these foundational components. Reports from September 2025 indicated that the government planned to redirect unutilized funds of approximately ₹5,500 crore from the PLI scheme towards a fresh initiative to support local manufacturing of wafers and ingots. Currently, Adani Solar is among the few domestic players capable of manufacturing wafers, while several other companies, including Tata Power, have announced plans to establish wafer and ingot facilities. Tata Power, for instance, intends to set up a 10 GW wafer and ingot manufacturing facility, complementing its existing 4 GW cell manufacturing capacity. Similarly, Avaada Group, with an annual module production of 8.5 GW, is developing 6 GW of solar cell manufacturing capacity expected by 2026, with plans for another 6 GW by late 2027, and ultimately aims for full backward integration of the entire solar component chain by FY28. These initiatives underscore India’s multi-pronged strategy to achieve comprehensive self-reliance in the solar sector, transforming from a primarily assembly-based industry to a fully integrated, globally competitive manufacturing powerhouse.
