To promote domestic manufacturing and reduce India’s dependence on imports, the government has taken a number of policy initiatives in the renewable energy sector. Renewable Watch provides an overview of the status of domestic manufacturing in the solar, electrolyser, battery storage and wind energy segments…
Solar component manufacturing
The central government has taken significant steps to enhance domestic solar manufacturing and reduce dependence on imports. These efforts include imposing tariffs such as basic customs duties (BCD) and implementing non-tariff measures such as domestic content requirements (DCR) and the Approved List of Models and Manufacturers (ALMM). Furthermore, in April 2021, the government launched the production linked incentive (PLI) scheme to promote the production of high-efficiency solar photovoltaic (PV) modules. Rolled out in two phases, the scheme has a total budget of Rs 240 billion for developing GW-scale domestic manufacturing capacity. It seeks to attract Rs 930 billion in investments to strengthen the country’s solar manufacturing sector.
Under Tranche I, letters of award (LoAs) were issued to three bidders in December 2021, for the establishment of fully integrated solar PV module manufacturing units with a total capacity of 8,737 MW. Following this, in April 2023, LoAs were issued under Tranche II to 11 bidders for developing 39,600 MW of fully or partially integrated solar PV module manufacturing capacity. The 39,600 MW capacity is planned to be achieved in three phases (7,400 MW by October 2024, 16,800 MW by April 2025 and 15,400 MW by April 2026). As a result of these initiatives, there has been a remarkable surge in module production capacity. As of October 2024, the solar module manufacturing capacity stood at 60,494 GW, following the latest update to the ALMM. During this time, the technology also advanced significantly, transitioning from primarily low-capacity polysilicon modules to higher-efficiency technologies such as mono PERC, TOPCon and heterojunction modules.
Several new projects have been announced recently, driven by policies in the solar manufacturing space. For instance, in January 2024, First Solar inaugurated its new 3.3 GW production facility in Tamil Nadu. In March 2024, Luminous Power Technologies inaugurated the solar panel manufacturing facility in Uttarakhand. In May 2024, Grew Energy announced plans to build a three-stage fully backward-integrated manufacturing plant in Jammu & Kashmir at an investment of Rs 45 billion. In the same month, Adani Solar announced plans to develop a 225 MW solar power manufacturing plant in Puranpura within a year. In August 2024, AXITEC inaugurated a new manufacturing plant in Tamil Nadu, with a production capacity of 300 MW.
In order to further provide support for domestic manufacturing of solar cells, the Ministry of New and Renewable Energy (MNRE), in September 2024, issued a draft amendment to the ALMM to include solar cells from April 1, 2026. Many companies have already been making efforts to contribute to the growth of solar cell manufacturing. In February 2024, RenewSys announced plans to develop a 1 GW TOPCon cell facility by December 2026. In September 2024, Jakson Engineering Limited announced an investment of Rs 20 billion to set up a 2.5 GW solar cell manufacturing plant. In the same month, TP Solar began commercial production at its 2 GW solar cell line in Tirunelveli. Furthermore, Gautam Solar announced its plan to launch and establish a 2 GW solar cell manufacturing plant. October 2024 saw Alpex Solar Limited announcing plans to manufacture solar cells with 1.6 GW of capacity in Uttar Pradesh.
Moreover, the recent wave of domestic solar manufacturers launching initial public offerings (IPOs) or unveiling plans to go public to fund their ambitious expansion goals reflects a vibrant optimism in the industry. In August 2024, Premier Energies announced a Rs 28.3 billion IPO. The momentum continued into September, with Vikram Solar filing a Rs 15 billion offering. October witnessed further developments, with Goldi Solar planning an IPO in 2026 and Gautam Solar aiming to raise Rs 10 billion within 12-18 months to support its 2 GW solar cell manufacturing project. Adding to this trend, Waaree Energies launched a Rs 43.21 billion IPO.
However, there has been considerable uncertainty surrounding the ALMM’s implementation during the past year. In March 2023, the ALMM was suspended, allowing all solar power projects commissioned by March 2024 to bypass its compliance requirements. Then, on February 9, 2024, the government reinstated the ALMM for solar PV modules, effective from April 1, 2024, with exemptions for open access and captive power projects at advanced stages of construction as well as for projects with solar module orders placed before March 31, 2024. Ironically, on February 15, 2024, the MNRE reversed this decision once again, putting the ALMM back in abeyance until further notice. Ultimately, these orders were rescinded, and the ALMM is now fully reinstated with no exemptions.
In the Union Budget 2024-25, significant support was provided to the solar manufacturing segment through the announcement of exemption on BCD for specified machinery and equipment used in the production of solar cells and modules. Moreover, BCD exemption has been extended on certain goods until March 31, 2026, and the range of materials eligible for import has been expanded. However, starting October 1, 2024, solar glass and tinned copper interconnects for the manufacture of solar cells or modules are subject to 10 per cent and 5 per cent customs duties respectively. The budget has further strengthened India’s energy transition by broadening the list of capital goods exempt from duties, specifically for the domestic production of solar cells and panels. In addition, the exemption of customs duties on 25 critical minerals and the reduction of duties on two others are expected to enhance resource efficiency and support advanced manufacturing in the solar segment.
Electrolyser manufacturing
The rising popularity of green hydrogen globally translates to a promising and sizeable opportunity for Indian manufacturers of electrolysers. The government has been making a lot of effort to tap this opportunity. As part of the Strategic Interventions for Green Hydrogen Transition Programme, under the National Green Hydrogen Mission (NGHM), one of the financial incentive mechanisms proposed pertains to domestic manufacturing of electrolysers (Component I) with a budget of Rs 44.4 billion. The NGHM was announced in early 2023.
As part of this component, the Solar Energy Corporation of India (SECI) issued a tender for 1,500 MW of electrolyser manufacturing capacity in July 2023. This consists of two buckets with the following capacity allocations: 1,200 MW under Bucket 1 (based on any stack technology) and 300 MW under Bucket 2 (based on indigenously developed stack technology). In December 2023, this tender was oversubscribed by 21 companies for developing 3.4 GW of annual capacity for manufacturing electrolysers. However, in January 2024, the entire 1,500 MW capacity was awarded to eight bidders. Under Bucket 1, with a maximum incentive allocation of Rs 4.44 billion each, Reliance Electrolyser Manufacturing, John Cockerill Greenko Hydrogen Solutions, and Jindal India won 300 MW per annum each. Meanwhile, Ohmium Operations, Advait Infratech, and L&T Electrolysers won 137 MW per annum, 100 MW per annum and 63 MW per annum, at a maximum incentive allocation of Rs 2.03 billion, Rs 1.48 billion, and Rs 0.93 billion respectively. Under Bucket 2, with a maximum incentive allocation of Rs 1.5 billion and Rs 2.94 billion, Homihydrogen and Adani New Industries won 101.5 MW per annum and 198.5 MW per annum, respectively.
In March 2024, as part of Component I, Tranche II of the Incentive Scheme for Electrolyser Manufacturing was announced, and SECI called for bids during the same month. It includes Bucket 1 (based on any stack technology) with a capacity of 1,100 MW, Bucket 2A (based on indigenously developed stack technology) with a capacity of 300 MW and Bucket 2B (based on indigenously developed stack technology – smaller units) with a capacity of 100 MW.
This tender was oversubscribed in July 2024 by 23 companies for developing 2,847 MW of annual capacity for manufacturing electrolysers. Finally, in September 2024, a total of 13 companies won under three different buckets. Under Bucket 1, Waaree Energies secured 300 MW, followed by Matrix Gas and Renewables at 237 MW, and Advait Infratech at 200 MW. The remaining winners in this bucket were Ohmium Operations with 137 MW, GH2 Solar with 105 MW, Newage Green Electro with 71.5 MW and Avaada Electrolyser with 49.5 MW. Meanwhile, Adani Enterprises was awarded 71.5 MW, with Newage Green Electro bagging 228.5 MW in Bucket 2A. In Bucket 2B, Adani Enterprises, Eastern Electrolyser, and Newtrace were awarded 30 MW each, while Suryaashish KA1 Solar Park was awarded 10 MW.
Apart from the policy impetus from the government, industry stakeholders have taken proactive steps in this space. In March 2024, Larsen & Toubro (L&T) launched its first domestically produced electrolyser at the green hydrogen plant located at the A.M. Naik Heavy Engineering Complex in Gujarat. In the same month, L&T signed a binding agreement with McPhy Energy to establish a GW-scale electrolyser manufacturing facility. In July 2024, Ohmium inaugurated its new GW-scale factory to produce hyper modular PEM electrolysers in Doddaballapura. In June 2024, Advait Infratech Limited revealed its intention to scale up electrolyser manufacturing capacity in Gujarat to 200 MW annually by 2025. October 2024 saw Oriana Power Limited unveiling plans to establish a GW-scale facility in India for manufacturing alkaline electrolysers and balance-of-plant modules.
BESS manufacturing
In order to establish a competitive edge in mobility, grid energy storage and consumer electronics, it is crucial for India to develop a localised ecosystem for advanced chemistry cell (ACC) batteries. Projections as per NITI Aayog’s report indicate that the country’s annual ACC battery demand could go up to 104-260 GWh by 2030 across various segments. Thus, to bolster the domestic battery manufacturing landscape, the Ministry of Heavy Industries (MHI) issued a tender in January 2024 aimed at establishing an additional 10 GWh of ACC manufacturing capacity with a maximum budgetary outlay of Rs 36.2 billion. In response to its global tender, proposals for a cumulative capacity of 70 GWh were submitted by seven companies. The tender was won by Reliance Industries Limited, which was awarded 10 GWh of ACC capacity. This tender forms a critical component of the National Programme on ACC Battery Storage as it aims to achieve a manufacturing capacity of 50 GWh of ACC, with a financial backing of Rs 181 billion as approved by the union cabinet in May 2021. To reach an ACC production capacity of 50 GWh, three beneficiary enterprises (Rajesh Exports, Ola Electric Mobility, and Reliance New Energy Solar Limited) were given 5 GWh, 20 GWh and 5 GWh, respectively, after the first round of the ACC PLI auction finished in March 2022. However, the first round was oversubscribed by 2.6 times with as many as 10 companies bidding for 130 GWh of capacity.
Apart from the capacities allocated by the MHI under the PLI scheme, other private players are also making efforts to set up battery manufacturing capacities. In January 2024, the International Battery Company raised $35 million in a funding round led by RTP Global. A portion of this investment will be directed towards establishing a 50 MWh battery manufacturing facility in Bengaluru. Meanwhile, Hindustan Zinc signed an MoU with Aesir Tech in June 2024 to develop a battery manufacturing facility in India. In October 2024, the JSW Group unveiled its intentions to develop a 50 GWh battery manufacturing facility in Odisha by 2028-30.
Wind turbine manufacturing
According to GWEC, India leads the wind energy segment in Asia after China, driven primarily by its robust domestic wind power manufacturing industry. Through sustained efforts, the country has developed approximately 17.25 GW of local wind manufacturing capacity, positioning itself as a significant hub for wind turbine production, as per NITI Aayog. Major global and Indian companies, such as Suzlon Energy, Siemens Gamesa Renewable Power, and GE India Industrial Limited, have contributed to this leadership. The OEMs operating in the Indian market also export wind turbines and blades to Australia, Brazil, the US, several countries in Europe, etc.
Meanwhile, India is making constant efforts towards the growth of the wind turbine manufacturing industry. In January 2024, AM Green and Envision Energy entered into an MoU for the production of wind turbines. The turbines will be utilised in AM Green’s projects in the country. In the same month, Reliance announced the setting up of India’s first carbon fibre facility at Hazira, Gujarat, for blade manufacturing. Furthermore, Refex Industries partnered with Winvision Enterprises in October 2024 to launch a joint venture focused on wind energy solutions. In November 2024, there were reports of JSW Energy planning to establish a wind turbine blade manufacturing facility in Karnataka.
The way forward
Although government has made several efforts to increase domestic manufacturing in various clean energy segments, several challenges persist. While the ALMM has finally been implemented in the solar segment, the policy uncertainty persisting over the past few months does not augur well for developers, manufacturers as well as long-term investors. It is important to have a clear policy structure in place for India’s solar manufacturing industry to grow, in terms of both domestic and export orders. Furthermore, the country’s solar manufacturing capacity remains constrained, with limited production of solar cells and negligible or non-existent domestic capacity for polysilicon, wafers and ingots. As a result, the solar industry is heavily reliant on imports of both modules and upstream components. This dependence creates hurdles in meeting the nation’s solar deployment targets, particularly as global demand for solar products continues to surge.
Meanwhile, a lot of activity has been happening in the domestic electrolyser manufacturing space with good support from the government. However, the success will largely depend on the indigenisation of the overall manufacturing cost.
Only 13 per cent of the total battery cell demand will be met through domestic production, with the remainder likely to be imported, as per S&P Global Mobility. This might be due to the country’s heavy reliance on imports for essential battery minerals, such as lithium, cobalt, graphite and nickel, the absence of comprehensive lithium-ion battery recycling ecosystem, and insufficient focus on critical equipment and technologies used in cell manufacturing.
India has made significant progress in domestic wind turbine manufacturing, with estimates from the MNRE suggesting that the country has achieved 70-80 per cent indigenisation in this sector. However, competition with China, which controls 61 per cent of the global wind turbine assembly capacity, presents a considerable challenge. Additionally, the import of wind turbine components, particularly from China, poses cybersecurity risks.
In sum, the country’s domestic manufacturing across various segments holds immense potential, bolstered by robust policy frameworks. However, the path forward depends on how effectively the government addresses the existing challenges and leverages this potential for sustainable growth.
