Changing paradigm
India’s solar success story has largely been built on scale and speed. Competitive bidding, falling prices and policy consistency helped solar power move from Rs16 per unit to below Rs3 in just over a decade. What began as a costly experiment is today one of the most affordable sources of energy in the country.
However, the next phase of growth will not be driven by scale alone. It will be shaped by technology depth, manufacturing integration and long-term resilience. As of mid-2025, India’s operational solar cell manufacturing capacity stands at about 25 GW. Nearly half of this, over 47 per cent, is already located in Gujarat. What is even more telling is what lies ahead. Of the 86 GW of solar cell capacity under construction or announced across the country, close to 38 per cent is expected to come up in Gujarat alone. Gujarat’s emergence as a manufacturing hub is therefore less about geography and more about direction.
Owning the technology: For years, India’s panel manufacturing ecosystem has been largely module-centric. Cells, the heart of a solar module, were mostly imported. This model worked when global supply chains were stable, and prices kept falling. But it also created a structural vulnerability.
Cells determine efficiency, performance and long-term reliability. As the industry rapidly moves from multi-PERC to TOPCon, bi-facial and eventually tandem technologies, dependence on imported cells is no longer just a cost risk – it is a technology risk.
The new policy recognises this reality. By making domestic cell manufacturing mandatory, India is sending a clear signal: solar manufacturing can no longer be about assembling components; it must be about owning the technology curve.
Moving to consolidation: This shift comes at a time when the industry is already grappling with excess capacity. India today has about 110 GW of approved module manufacturing capacity. Yet, only 70-75 per cent of this can adapt to newer technologies. Module capacity is projected to rise to nearly 165 GW, while annual installations are expected to remain in the range of 45-50 GW.
Such an imbalance will inevitably lead to consolidation. Manufacturers with older technologies, limited scale and no backward integration will find it increasingly difficult to survive. Cell manufacturing is capital- and process-intensive, and not all players will be able to make that transition. That is not a flaw of the policy; it is its intent. The objective is not to protect capacity, but to strengthen capability.
Efficiency is the new economics: As tariffs stabilise, efficiency improvements are emerging as the most powerful lever in solar economics. A one percentage point increase in module efficiency can generate an additional 13,000-17,000 units per MW annually. At current tariffs, that translates into Rs40-50 lakh of incremental value for a 100 MW plant.
With cell efficiencies expected to cross 30 per cent in the coming years through tandem technologies, the industry is entering a phase where technology differentiation will matter far more than price undercutting. Without domestic cell manufacturing, Indian players risk becoming technology followers in their own market, dependent on global suppliers for the very innovations that define competitiveness.
Policy as an enabler: India’s solar journey has always been policy-enabled but market-driven. From reverse auctions to ambitious capacity targets, the government has consistently created conditions for competition rather than fixing outcomes.
The mandate on domestic cell manufacturing follows the same philosophy. It does not guarantee success. It simply ensures that those who succeed do so by investing in technology, scale and long-term commitment. The planned push towards backward integration into wafers and ingots by 2028 further reinforces this thinking. Today, energy security is as much about supply chains as it is about generation capacity.
A necessary transition: Solar power offers India a rare opportunity – abundant resource, declining costs and strategic relevance. But true energy sovereignty cannot rest on imported cores. Domestic cell manufacturing strengthens supply resilience, improves quality control, creates skilled jobs and anchors value within the country.
For manufacturers, this transition demands courage and capital. For policymakers, it requires consistency and clarity. For the industry as a whole, it calls for a mindset shift from chasing volumes to building value.
Looking ahead: India’s renewable ambitions are long-term, so must be its manufacturing strategy. The mandate on domestic solar cell production is not about the present cycle; it is about preparing for the next decade of technology-led growth. It marks a clear break from the past and lays the foundation for a more resilient, competitive and self-reliant solar ecosystem.
The paradigm in panel manufacturing is changing. Those who adapt will shape India’s energy future. Those who don’t will be left behind.