India Mandates Use of Locally Made Solar Cells from June 1, Raising Industry Concerns
From June 1, solar projects must use only locally made cells: Why this raises concerns
Image: The Indian Express
Starting June 1, all solar projects in India must utilize domestically manufactured solar cells. While the policy aims to boost local manufacturing and reduce imports, it raises concerns about supply shortages and increased costs, particularly affecting smaller manufacturers who rely on imported cells.
- 01India's solar module manufacturing capacity stands at nearly 200 GW, but domestic cell production is only about 30 GW.
- 02Modules using locally sourced cells can cost up to 120% more than those using imported cells, significantly impacting smaller manufacturers.
- 03The new mandate could lead to market consolidation, favoring larger companies with integrated manufacturing capabilities.
- 04Industry experts predict domestic cell manufacturing capacity could reach 100 GW by December 2027, easing supply concerns.
- 05The government has exempted large utility-scale solar projects bid out before August 31, 2025, from the domestic sourcing requirement.
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The Indian government has mandated that all solar projects, including net-metering and open access installations, must use only domestically manufactured solar cells starting June 1. This initiative aims to bolster India's solar manufacturing sector and reduce reliance on imports. However, the current domestic cell manufacturing capacity is only about 30 GW, while the module manufacturing capacity is nearly 200 GW, raising concerns about supply shortages. Smaller module manufacturers, who typically do not produce their own cells, may face significant challenges as they will need to source cells from larger competitors, potentially leading to market consolidation. Industry insiders warn that the price of domestically produced cells is expected to rise, with modules using local cells costing approximately 80% to 120% more than those using imported cells. Despite these concerns, some industry leaders view the mandate as a necessary step to strengthen domestic manufacturing capabilities, with expectations that capacity could increase significantly in the coming years.
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The new mandate could lead to increased costs for solar projects, particularly affecting smaller manufacturers who may struggle to procure locally made cells.
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