Indian solar panel manufacturers are shutting factories and cutting production as they struggle to secure domestically produced solar cells following the introduction of new government sourcing rules, according to industry representatives and analysts. The shortages, which manufacturers say have led to waiting periods of up to eight months for locally made cells, have disrupted production, threatened thousands of jobs and put billions of dollars in investment at risk.
The disruption began after regulations requiring the use of domestically manufactured solar cells took effect on 1 June. Manufacturers that previously relied on Chinese imports said the limited availability of Indian-made cells has significantly increased production costs and forced many businesses to scale back operations.
Shailendra Shukla, chairman of solar module manufacturer Icon Solar, said the company had suffered from a lack of domestic cell supplies for the past three months and expected annual production to fall sharply to about one gigawatt from 3.2 gigawatts.
The All India Solar Module Manufacturers Association told Reuters that nearly one-third of India’s 140 small and medium-sized solar panel manufacturers, which account for around 60% of the country’s manufacturing capacity, have halted production. The remaining companies have reduced operations to three or four production days each week. Manufacturers without their own solar cell facilities said they are facing waiting periods of six to eight months for domestic supplies, while the cost of producing panels using locally sourced cells has almost doubled compared with modules made using Chinese cells.
India’s Ministry of New and Renewable Energy said it had not received formal reports of production halts among standalone solar module manufacturers but was monitoring prices and expected sufficient domestic cell manufacturing capacity to become available within six months.
Industry sources said expanding domestic production has proved difficult because solar cell manufacturing requires advanced technology and substantial investment. They also said China’s restrictions on exports of solar manufacturing technology, equipment and technical support have slowed efforts to build new production facilities in India.
The shortages have also raised concerns over India’s renewable energy ambitions. Industry sources and analysts warned that delays to solar projects and higher costs could hinder the country’s goal of reaching 500 gigawatts of non-fossil fuel power capacity by 2030, up from the current 288 gigawatts. Solar energy currently accounts for about 29% of India’s non-fossil fuel generating capacity and is projected by the Central Electricity Authority to increase from 162 gigawatts to more than 292 gigawatts by 2030.
Although government estimates show India has around 200 gigawatts of solar panel manufacturing capacity, it can produce only 27 gigawatts of solar cells. German-based EUPD Research and industry sources said effective operating capacity is closer to 16 to 18 gigawatts because much of the installed capacity is either not operational or running below rated levels.
Rajan Kalsotra, senior consultant at EUPD Research, said India faced a significant deficit in solar cell supply that could take three to five years to close. He said new facilities require major capital investment, technology partnerships and lengthy commissioning periods, while China’s dominance in manufacturing equipment and technology would continue to make rapid expansion difficult.
India relies on China for about 95% of its solar cell imports, according to industry estimates, with imports rising 37% during the last fiscal year to approximately $1.86 billion. Industry sources told Reuters that China has tightened controls over technology exports and equipment sales to India, delaying the establishment of new manufacturing plants. China’s Ministry of Commerce did not respond to Reuters’ requests for comment.
Manufacturers also warned that the government’s decision to extend the deadline for mandatory use of domestic solar cells to December 2026 for some projects would provide only limited relief unless applied across the industry. According to industry groups, standalone solar module manufacturers employ about 75,000 workers, including 45,000 in Gujarat. Pinaki Bhattacharyya, chief executive of AMPIN Energy Transition, said power producers could face a short-term increase of about 35% in capital expenditure until domestic cell manufacturing capacity expands.
