As prolonged dependence on the imports raises the severity of the associated risks, India needs a sustainable, vertically integrated domestic solar manufacturing ecosystem. In addition to the PV manufacturing landscape, this article delves into other key aspects...

The steep rise in module prices over the past 1.5 years has been due to a severe shortage in polysilicon, translating to a massive surge (approximately six times) in its price. Another key driver for the sharp price increase is the resurgence of solar market demand post COVID-induced lockdowns.

However, after trading at a 10-year high, (~US$43/kg) in November 2021, the polysilicon price began to decline (nearly 17% decrease by early January 2022), as key global polysilicon suppliers expanded production, adding 160,000 tons/year to the existing global capacity of ~620,000 tons/year. Elevated polysilicon prices are expected to last through the first half of 2022.16

Other disrupting factors in the PV supply chain include price hikes for commodities such as glass and metals, the recent power crisis in China, shortage of containers etc. As polysilicon is the single most critical part of the supply chain, such disruption underscores the need for its integration in PV manufacturing in India.

Figure 19: Recent Price Trends of Solar PV Products

High Capital Cost

India has been a laggard with PV technology. To remedy this, it is important that new domestic module factories are as vertically integrated as possible. The complex and capital-intensive nature of solar module production is a major challenge – setting up a solar cell production line is even more capital-intensive and complicated. A new 1GW (mono-PERC) cell production line in India would cost about Rs 5,000m, and take three to six months for facility setup, machinery installation and process fine-tuning.17 Furthermore, debt financing for fab set-up is costlier (8-9% interest rate) in India than in developed nations (2-4%). The impact of the more expensive debt option is even more pronounced considering fabs are 70-75% funded by debt.

High Operating Cost

Operating expenses (opex) are significant in PV manufacturing and are not addressed under the PLI. Opex components including 24/7 electricity, transportation cost, water requirement etc., need to be optimised to improve viability of managing solar fab.

PV manufacturing is a power-intensive process. And the power intensity increases upstream along the PV value chain, so affordable power supply is also critical. States that have greater concentration of solar fabs such as Gujarat, Telangana etc., need to provide these facilities with power at subsidised rates or ensure unfettered Open Access (OA) power (either via third party sale or captive/group captive plant).

Policy Uncertainty & Inadequacy

Lack of cohesive Renewable Energy (RE) policies among centre and state governments and frequent fluctuations of the same have stalled the growth of RE installations mainly in Open Access (OA) and rooftop solar market in India. The solar sector leads the renewables charge but constantly faces policy impediments. Step-by-step intervention guided by relevant stakeholder discussions must be undertaken to remove the limits on OA market across states.

Ambiguity around Goods and Services Tax (GST) rates, curbing of favourable provisions such as net metering and banking of RE are among the main issues affecting the solar industry. Attempting to apply ALMM against the backdrop of the BCD regime will put undue pressure upon the domestic solar industry in the near future as the market seeks to strike a demand-supply balance, potentially exacerbating domestic module price volatility.

Furthermore, India’s dependence of PV imports is not expected to undergo a drastic change post BCD imposition in the medium-term. This is because new solar fab with stage 1 to 4 integrated manufacturing would take at least three to four years from setup to producing globally competitive PV products. Until then government could plan to defer the BCD imposition on solar cells.

JMK Research estimates that manufacturing capacity additions, coupled with tariff and non-tariff barriers, can reduce the import dependence of India’s solar module market from 80% to 60-65% only in the next two to three years.

Export Limitation

Only a handful of domestic players are exporters. In the absence of a domestic certifying agency permitting export of PV products, Indian manufacturers must rely on international authorities to obtain certification, a highly expensive and time-consuming process that is more prohibitive than attractive. Moreover, there is no single globally recognised certification – different countries have differing standard certifications. The Indian government needs to aid the development of world-class certifying labs for solar PV.

Lack of Skilled Manpower

During and after the pandemic, the scarcity of skilled manpower in India trained to handle installation of cell lines limited the expansion plans of several solar cell manufacturers. With the scaling-up of domestic cell capacities, as proposed by various local manufacturers, the skills shortage will most likely be resolved in the next few years.

Lack of R&D

Research and development in photovoltaics is starkly deficient. The contribution from India’s PV manufacturers, academia, government and investors is insignificant. To cut dependence on imports, PV manufacturers need adequate support from the government to unlock the tremendous potential for innovation and development of indigenous PV cell technology and cutting-edge manufacturing techniques.

R&D in Chinese companies is funded by 1-5% of company revenues, consistently providing the thrust for innovations. To catalyse solar PV R&D in India, the government could support PV manufacturers via special incentives (e.g., tax deductions on R&D spending).

Figure 20: R&D Expenses of Leading Chinese Solar Manufacturing Companies

Technology Adoption Lag

India has been a laggard in solar PV technology adoption. In the world’s major solar markets, mono-Si is ubiquitous yet the Indian solar manufacturing industry has still not caught up, majorly producing cheaper multi-Si modules, primarily due to the domestic market’s price-sensitive nature.

                                                      …To be continued

16 BloombergQuint, China’s Solar Giants Have a Fix for Their Broken Supply Chain, January 2022.

17 JMK Research Interview insights.





Jyoti Gulia is the Founder of JMK Research. Jyoti has about 15 years of rich experience in the Indian renewable sector. Her core expertise includes policy and regulatory advocacy, assessing market trends, and advising companies on their business strategy.





Prabhakar Sharma is a Senior Research Associate at JMK Research with expertise in tracking renewable energy and battery storage sector. He has previously worked with Amplus Solar.





Akhil Thayillam is a Research Associate at JMK Research. Akhil is a renewable sector enthusiast with experience in tracking new sector trends as well as policy and regulatory





Energy Economist Vibhuti Garg has advised private and public sector clients on commercial and market entry strategies, investment diligence on power projects and the impact of power sector performance on state finances. She also works on international energy governance, energy transition, energy access, reallocation of fossil fuel subsidy expenditure to clean energy, energy pricing and tariff reforms.

JMK Research & Analytics is a boutique consulting firm for all kinds of research and advisory services for Indian and International clients focusing on Renewables, Electric mobility, and the Battery storage market. For further information:

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