India has implemented new solar sector regulations from June 1, requiring the use of domestically manufactured solar cells in solar modules deployed in specified net-metering and open-access projects. The measure is aimed at strengthening domestic manufacturing and reducing dependence on imported products, although it may lead to cost and supply-related challenges in the initial phase.
The new rule is expected to affect rooftop solar projects, open-access installations, and systems installed under the PM Surya Ghar scheme. Under the revised framework, solar cells used within solar modules for these categories must be manufactured in India and sourced from government-approved companies. The government has stated that the objective is to strengthen the domestic solar manufacturing ecosystem and reduce reliance on imports.
The move comes as India continues efforts to expand solar energy generation. While the country's solar module manufacturing capacity has increased significantly in recent years, solar cell production remains below overall demand. Current domestic solar cell manufacturing capacity is estimated at approximately 25–30 gigawatts annually, while demand exceeds that level.
In view of this gap, the government aims to encourage greater investment in solar cell manufacturing by domestic companies. The new requirement is expected to increase demand for Indian-made solar cells, potentially strengthening the country's manufacturing capacity over time and reducing dependence on foreign supply chains.
Industry experts have indicated that the change could have an impact on project costs. According to industry estimates, domestically manufactured solar cells are currently more expensive than imported alternatives, which could increase the overall cost of rooftop solar systems.
Estimates suggest that solar installation costs could rise by around ₹3,000 per kilowatt. As a result, a consumer installing a 5-kilowatt rooftop solar system could incur an additional expense of approximately ₹15,000. Subsidies available under the PM Surya Ghar scheme will continue, which may provide some relief to consumers.
Some sections of the industry have also expressed concerns regarding supply availability. They argue that domestic solar cell production capacity is not yet sufficient to fully meet demand. If the number of solar projects increases rapidly in the coming months, pressure on cell availability could intensify.
Small and medium-sized module manufacturers are expected to face the greatest impact. These companies typically do not produce solar cells and instead procure them from larger manufacturers before assembling modules. Limited supply and rising demand could increase procurement costs for such firms and affect their competitive position.
Experts believe that while the policy may create short-term cost and supply challenges, it could strengthen India's solar manufacturing ecosystem over the longer term. If domestic production capacity expands rapidly, the country could enhance both its energy security and its position in the global solar market. Industry participants and consumers are continuing to monitor the effects of the new regulatory framework.
