New government policies to support solar manufacturing in India

By Jyoti Gulia, senior manager, market intelligence, at Bridge to India
Facebook
Twitter
LinkedIn
Reddit
Email

India’s solar cell and module manufacturing capacity was about 1,200MW and 5,600MW respectively according to Ministry of New and Renewable Energy (MNRE) figures as of April 2016. These numbers appear significant in relation to annual addition in solar power generation capacity, however, the average size of a cell and module manufacturing line in India is only 86MW and 69MW respectively. Moreover, most of this manufacturing capacity is technically obsolete and is lying idle. In comparison, Trina Solar, the largest module manufacturer globally based out of China, is expected to surpass 6GW in actual module production in 2016; higher than the cumulative capacity of all Indian module manufacturers.

To support domestic manufacturers, the Indian government has historically mandated a part of the solar capacity addition using domestic modules. A financial incentive has also been available for new manufacturing facilities, with up to 25% of capital cost subsidised under the Modified Special Incentive Package Scheme (M-SIPS) of the Ministry of Communications and Information Technology. Despite these support mechanisms, India has not been able to attract significant investments in the sector.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

The Indian government is now planning to announce a new solar manufacturing policy, which aims to offer Viability Gap Funding (VGF), a financial subsidy, to companies setting up integrated manufacturing facilities so that they can compete on an even level with their global counterparts. We understand that the policy also envisages providing a ‘reasonable’ module offtake assurance for 5-7 years. The ‘Make in India’ initiative already recognizes solar manufacturing as an industry having “strategic importance”.

With the imminent implementation of Goods and Services Tax (GST) in 2017, domestic solar manufacturers will also get a level playing field with overseas manufacturers. Currently, a domestic manufacturer pays a Countervailing Duty (CVD) of 12% on raw material and cannot claim tax credits because solar modules are exempted from excise duties. Further, a Value Added Tax (VAT) of about 5% in most states is levied by state governments on domestic manufacturing. VAT is not applicable on imported modules for direct imports. In such a scenario, GST implementation will restore tax parity between domestic and overseas manufacturers.

With these favourable developments, it is expected that several new players which have previously announced their solar manufacturing plans will now expedite their plans. Adani Group plans to invest US$2 billion in developing a 3GW solar manufacturing plant over a three-year period. The company also plans to enter polysilicon production at a later date. Trina Solar is also planning to invest US$200-300 million in a manufacturing facility in Andhra Pradesh. The company plans to manufacture 700MW of cell and 500MW of module line capacity. Meanwhile, existing domestic manufacturers like Vikram Solar also plan to expand their module manufacturing capacity. We believe that several other companies including Shapoorji Pallonji, Lanco, Waaree, Emmvee are seriously reviewing prospects of similar investments.

Booming local market and a supportive policy framework should ensure substantial solar cell and module capacity addition in India in the next three years. Whether Indian manufacturers can compete with large Chinese suppliers on the global stage is yet to be seen.

Read Next

July 15, 2025
Indian renewable energy company SAEL Industries is developing a 5GW solar cell and 5GW module manufacturing facility in Greater Noida, Uttar Pradesh.
July 11, 2025
Indian independent power producer (IPP) Juniper Green Energy has commissioned an additional 71MWp at Chapalgaon Solar Project in Solapur, Maharashtra.
July 9, 2025
Indian solar water pump and motor manufacturer Shakti Pumps has successfully raised INR2.9 billion (US$34.1 million) to build a solar cell and module manufacturing plant.
July 8, 2025
German solar glass manufacturer Glasmanufaktur Brandenburg (GMB) has filed for insolvency after posting monthly losses of €900,000 this year.
July 8, 2025
Energy consultancy JMK Research has forecast 28.3GW of utility-scale and residential solar PV to be installed in India during fiscal year 2026.
July 8, 2025
SJVN Green Energy has commenced commercial operations of 100.02MW from its 1,000MW solar power project in Bikaner, Rajasthan.

Subscribe to Newsletter

Upcoming Events

Media Partners, Solar Media Events
September 2, 2025
Mexico City, Mexico
Solar Media Events
September 16, 2025
Athens, Greece
Solar Media Events
September 22, 2025
Bilbao, Spain
Solar Media Events
September 30, 2025
Seattle, USA
Solar Media Events
October 1, 2025
London, UK