India's Rs 6,500 Cr Solar Bet: Mandating Local Cells to Cut China Reliance

For supply chain professionals, India's directive mandating locally produced solar cells in net-metering and open access projects marks a seismic shift. The move forces procurement managers to rapidly source from domestic manufacturers and accelerates the build-out of a complete solar value chain—from wafers to modules—cutting reliance on Chinese imports and mitigating geopolitical risk.

India's pursuit of energy transition sovereignty has entered a pivotal phase with the Ministry of New and Renewable Energy (MNRE) issuing a mandate that all net-metering and open access solar projects commissioned after June 1, 2026, must employ domestically manufactured solar cells. The directive targets the rooftop solar segment—encompassed by the flagship PM Surya Ghar: Muft Bijli Yojana—and commercial and industrial consumers procuring renewable power through open access. This move directly challenges China's entrenched dominance in the global solar supply chain, where it holds more than 80% market share in key components such as polysilicon, wafers, and cells.

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Other industrial heavyweights—Reliance Industries (through its gigafactories at Jamnagar), Adani Group, Waaree Energies, Avaada, Grew Solar, and Renew—are similarly expanding beyond modules into cells, wafers, and ingots.

For years, India's solar boom was built on low-cost Chinese modules and cells, with domestic manufacturing largely limited to module assembly using imported cells. Policy interventions like the 2022 Basic Customs Duty of 25% on solar cells and 40% on modules, the Production Linked Incentive scheme with an outlay of Rs 24,000 crore for high-efficiency solar modules, and the Approved List of Models and Manufacturers (ALMM) gradually nudged the industry toward local value addition. The new MNRE diktat represents a sharp acceleration: it stops short of banning imports outright but creates a captive market for Indian cell manufacturers in the fast-growing distributed solar segment.

The corporate response underscores the opportunity. Tata Power Renewable Energy Ltd's Rs 6,500 crore plan to build 10 GW of ingot-wafer capacity marks one of the largest single investments in upstream solar manufacturing in India. Other industrial heavyweights—Reliance Industries (through its gigafactories at Jamnagar), Adani Group, Waaree Energies, Avaada, Grew Solar, and Renew—are similarly expanding beyond modules into cells, wafers, and ingots. According to Vinay Thadani of GREW Solar, the policy focus is moving upstream, aiming to build a globally competitive ecosystem that reduces long-term import reliance.

The operational implications for supply chains are profound. Project developers must now secure cells from approved domestic sources, potentially causing near-term bottlenecks as capacity ramps up. Industry estimates suggest domestic cell production capacity could reach 30-35 GW by 2027, but wafer and polysilicon capacity will take longer. TERI's recommendation to extend ALMM to wafers and polysilicon, coupled with suggested ring-fencing of government projects to absorb initial cost premiums, aims to manage the transition without stalling deployment.