India is actively shifting its energy transition strategy from merely adding renewable capacity to ensuring its reliability through robust domestic manufacturing, particularly in battery storage and solar components. This strategic pivot aims to reduce the nation's substantial reliance on Chinese imports, which currently underpins much of its renewable energy sector.
Government Directives Drive Local Production
To bolster supply chain resilience and decrease long-term import dependence, the Indian government has issued clear directives. A key measure mandates the use of only locally manufactured solar cells in domestic rooftop and commercial and industrial (C&I) solar projects commissioned after June 1. This applies to installations under schemes like the PM Surya Ghar: Muft Bijli Yojana, where consumers can feed surplus power back to the grid, and open access projects for C&I consumers.
Several policy initiatives are accelerating this shift, including the Production Linked Incentive (PLI) scheme, the Approved List of Models and Manufacturers (ALMM), Domestic Content Requirement (DCR), and Basic Customs Duty (BCD). These measures are designed to stimulate significant investments in the domestic renewable energy manufacturing ecosystem.
Industry Responds with Backward Integration
The industry is moving beyond just module assembly, focusing on deeper backward integration within the solar value chain. Companies like Reliance, Adani, Tata Power, Waree, Avaada, Grew, and Renew are investing heavily in upstream manufacturing.
For instance, Tata Power Renewable Energy Ltd (TPREL) plans to invest 6,500 crore rupees to develop an ingot-wafer manufacturing capacity of up to 10 GW, phased into two 5 GW stages. This focus on producing key components like ingots, wafers, and polysilicon domestically is crucial for achieving self-reliance.
Expanding Certification and Managing Tariffs
A paper from The Energy and Resources Institute (TERI) recommends extending the ALMM framework, which currently certifies module makers, to cover the entire value chain. The Ministry of New and Renewable Energy (MNRE) has already announced ALMM for cells starting June 2026, with calls to extend it to wafers and polysilicon within the next one to two years.
To manage the potential impact on tariffs, TERI suggests that the transition to ALMM for cells and upstream components should initially be limited to government and Public Sector Undertaking (PSU)-linked procurement, or a defined annual allocation (e.g., 25-50 GW). This approach would allow open access and competitively tendered private projects to maintain flexibility in procuring least-cost modules during the scale-up period, ensuring a smoother transition for the broader market.