By Lavkesh Balchandani
India’s solar energy segment is experiencing a renaissance, driven by a confluence of market forces, technological advancements and strategic policy initiatives. As the country strives to achieve energy security and reduce its carbon footprint, the solar manufacturing space stands as a critical pillar in this transition. This article delves into the market dynamics, technological trends and policy support that are fuelling India’s solar manufacturing renaissance, positioning the nation as a global hub for this rapidly evolving industry.
Market dynamics
The Indian solar market has witnessed an unprecedented surge in demand, propelled by the government’s ambitious renewable energy targets and a growing awareness of the environmental and economic benefits of solar power. This soaring demand has created a massive opportunity for domestic manufacturers in the solar market, which has historically been heavily reliant on imports. To this end, the Indian government has implemented a range of measures to encourage local manufacturing, including import duties, incentive schemes and policies promoting domestic content requirement.
One of the most significant drivers of India’s solar manufacturing renaissance has been the global shift in supply chains, accelerated by geopolitical tensions and the Covid pandemic. As countries around the world seek to reduce their dependence on China – the dominant player in the solar manufacturing landscape – India has emerged as an attractive alternative destination for investments and manufacturing operations.
This shift has been facilitated by India’s large domestic market, skilled workforce and cost advantages, as well as the government’s proactive efforts to create a conducive environment for domestic manufacturing through policy interventions and incentives.
Technological advancements
India’s solar manufacturing space is not only expanding in capacity but also embracing cutting-edge technologies and innovations that are reshaping the industry. One of the most significant technological trends is the transition towards higher-efficiency solar cells and modules, driven by the demand for greater energy output and cost-effectiveness. Manufacturers are rapidly adopting advanced cell technologies such as passivated emitter and rear cell (PERC), heterojunction technology (HJT) and (TOPCon) tunnel oxide passivated contact cells, which offer higher conversion efficiencies and improved performance compared to conventional silicon cells.
Another notable trend is the increasing adoption of bifacial solar modules, which can capture light from both sides and offer higher energy yields, particularly in regions with high albedo (reflectivity). Indian manufacturers such as Vikram Solar and Waaree Energies have begun producing bifacial modules, positioning themselves at the forefront of this technological shift.
Beyond cell and module technologies, the country is also witnessing advancements in the upstream segments of the solar value chain. One of the defining features of India’s solar manufacturing renaissance is the drive towards vertical integration, with companies establishing end-to-end capabilities spanning the entire value chain. This strategic move not only reduces reliance on imports but also enhances cost-effectiveness, quality control and supply chain resilience. For instance, the country is rapidly expanding its polysilicon production capabilities, a critical component for solar cell manufacturing. Companies such as Indosolar, the Adani Group and Reliance Industries have announced ambitious plans to establish fully integrated solar manufacturing facilities, encompassing polysilicon production, ingot and wafer manufacturing, cell production and module assembly.
For instance, Reliance’s ambitious Dhirubhai Ambani Green Energy Giga Complex in Jamnagar, Gujarat, aims to be a fully integrated, end-to-end renewable energy ecosystem, spanning solar panel and battery manufacturing, electrolyser production for green hydrogen and an associated solar power project. Similarly, the Adani Group’s integrated solar manufacturing facility in Mundra, Gujarat, will include polysilicon production, ingot and wafer manufacturing, and cell and module production lines, creating a vertically integrated supply chain. This facility will also produce monocrystalline PERC and HJT cells and modules. While strengthening domestic manufacturing capabilities, this vertical integration strategy also positions the country as a potential export hub for solar products and technologies.
Innovation is driving the development of new market segments, such as building-integrated PV and agrivoltaics (the co-development of solar power generation and agriculture on the same land). While these segments are still in their nascent stages, they hold immense potential for the domestic solar manufacturing space, offering opportunities for product diversification and new revenue streams.
Policy support
The Indian government’s proactive policy measures and incentives have played a pivotal role in catalysing the growth of the domestic solar manufacturing sector. One of the most significant initiatives has been the production-linked incentive (PLI) scheme, designed to enhance India’s manufacturing capabilities and promote domestic production across various sectors, including solar energy.
Under of the PLI scheme’s Tranche I, the government allocated an outlay of Rs 45 billion to enhance domestic solar manufacturing capabilities, with a targeted capacity of 10 GW. The overwhelming response, with bidders quoting a total capacity of 54.8 GW – a staggering 5.48 times oversubscription – highlighted the immense potential and interest in this sector. Building on this success, the government announced Tranche II of the scheme in 2022, with an increased outlay of Rs 195 billion and a targeted capacity of 39,600 MW. This tranche has been awarded to 11 companies, with a total outlay of Rs 140 billion, and is expected to bring in an investment of Rs 930 billion.
In addition to the PLI scheme, the Indian government has implemented several measures to support domestic solar manufacturing, including the imposition of basic customs duty on imported solar cells and modules, the Approved List of Models and Manufacturers to ensure quality and reliability, and the Modified Special Incentive Package Scheme to provide subsidies for capital expenditure. These policy initiatives have not only attracted significant investments from domestic and international players but also created a level playing field for Indian manufacturers, enabling them to compete effectively with imported solar products.
Challenges and opportunities
While the Indian solar manufacturing sector has made remarkable strides, several challenges remain that must be addressed to ensure sustained growth and global competitiveness. One of the primary challenges is access to affordable technology for mining and processing critical minerals and raw materials required for solar cell and module production. India currently lacks indigenous technologies for streamlining these processes and relies heavily on strategic partnerships and joint ventures with international companies.
Another significant challenge is the procurement of manufacturing equipment, particularly for ingot, wafer and polysilicon production. India is heavily dependent on imports for such equipment, often accompanied by associated duties, adding to the overall cost burden.
To address these challenges, the Indian government must develop a comprehensive national strategy focused on fostering indigenous technologies for raw material processing and encouraging the domestic production of manufacturing equipment. This could involve incentivising research and development (R&D), facilitating technology transfers and fostering collaborations between academia, research institutions and the private sector. Furthermore, continued policy support and incentives will be crucial to maintaining the country’s solar manufacturing renaissance momentum. This could include providing additional incentives, setting up dedicated industrial parks or clusters, streamlining regulatory processes and promoting R&D in emerging technologies and market segments.
Conclusion
India’s solar manufacturing sector is undergoing a remarkable transformation, driven by surging demand, supportive policies and a commitment to technological innovation. Market trends, characterised by ambitious renewable energy targets and policy incentives, have created a conducive environment for domestic manufacturing to thrive.
Simultaneously, technology trends, encompassing high-efficiency cell technologies, bifacial modules, next-generation materials, smart module technologies and integrated solar solutions, are positioning India as a hub for cutting-edge solar innovations.
While challenges related to raw material availability, manufacturing equipment and workforce development persist, the Indian government and industry stakeholders are actively addressing these issues through strategic initiatives and collaborations.
As the world transitions towards a more sustainable energy future, India’s solar manufacturing sector stands at the forefront, poised to contribute significantly to the global renewable energy landscape. By capitalising on its strengths and seizing the opportunities presented by the rapidly evolving market and technology trends, the country can cement its position as a leader in the solar manufacturing industry.
Net, net, despite the challenges, India’s solar manufacturing sector holds immense potential for growth and innovation. The country’s vast domestic market, skilled workforce and cost advantages, coupled with a robust policy framework, position it as an attractive destination for investments and manufacturing operations.
