India Tightens Solar Sourcing Norms: How Solar Sourcing Norms Reduce Chinese Imports

Solar Sourcing Norm Latest News

• The government has expanded its domestic sourcing mandate for solar equipment to include wafers and ingots, effective from June 2028. 
• This requirement will apply mainly to government-backed, utility-scale, and commercial projects, including schemes like PM Surya Ghar.
• Currently, the mandate covers mainly solar PV modules, while other components can still be imported. 
• However, a separate rule mandating domestic solar cells will come into effect from June this year, indicating a gradual push toward full supply chain localisation.

Reducing Import Dependence in Solar Manufacturing

• The extension of domestic sourcing norms to wafers and ingots aims to cut import dependence and strengthen local manufacturing in India’s solar sector.
• While India has built strong capacity in solar modules (172 GW) and cells (27.2 GW), upstream segments like polysilicon, ingots, and wafers remain underdeveloped, with wafer and ingot capacity at only about 2 GW.
• Wafers are an important step in making solar panels. First, raw material (polysilicon) is turned into ingots, then cut into thin wafers. 
• These wafers are used to make solar cells, which are finally assembled into solar panels. That’s why producing wafers in India is important for reducing dependence on imports.

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Domestic Wafer Rollout Norms in Solar Sector

• According to a memorandum by the Ministry of New and Renewable Energy (MNRE), a list of domestic wafer manufacturers will be announced only when: 
  • At least three independent units exist (no common ownership)
  • Combined capacity reaches 15 GW.
• A new Approved List of Models and Manufacturers (ALMM) i.e. ALMM List-III will be created specifically for wafers.
• Manufacturers must also have matching ingot production capacity to qualify.
• The framework ensures end-to-end domestic sourcing, strengthening India’s solar manufacturing ecosystem and reducing reliance on imports.

ALMM Framework for Solar Supply Chain

• MNRE’s Approved List of Models and Manufacturers (ALMM) ensures domestic sourcing:
  • List-I: Solar modules
  • List-II: Solar cells
  • List-III (new): Solar wafers
• Cascading Requirement
  • Modules must come from List-I manufacturers
  • Cells must come from List-II manufacturers
  • Wafers used in cells must come from List-III manufacturers

Transitional Exemptions

• Projects are exempt from domestic wafer sourcing if:
  • Bid submission is on or before the cut-off date
  • Cut-off = 7 days after first wafer ALMM list is issued
• Projects with bids or PPAs before the cut-off remain exempt, even if later procurement occurs.

Mandatory Compliance After Cut-Off

• Projects with bids after the cut-off date must ensure:
• Modules, cells, and wafers are sourced strictly from ALMM List-I, II, and III
• Tender documents must explicitly include these requirements.

Upstream Challenges in India’s Solar Manufacturing

• Despite growth in solar module manufacturing, upstream segments like polysilicon, ingots, and wafers face challenges.
• Key issues include high capital requirements and price competition from cheaper Chinese imports.

Performance of the PLI Scheme

• The Production Linked Incentive (PLI) scheme covers both:
  • Upstream: Polysilicon, ingots, wafers
  • Downstream: Cells and modules
• Launched in 2021 to build 65 GW annual capacity, with total outlay of ₹24,000 crore.
• However, progress has been uneven, with upstream segments lagging behind.

Implementation Gaps and Capacity Achievement

• Overall operational capacity reached only 29% of awarded capacity (as of June 2025).
• Performance across segments:
  • Modules: 59% (strong progress)
  • Cells: 22%
  • Wafers/Ingot: 10%
  • Polysilicon: 14%
• Indicates significant execution gaps, especially in upstream manufacturing.

Continued Import Dependence

• India still relies heavily on imports:
  • Solar cells: $1,641 million
  • Wafers: $156 million
    • Polysilicon: $0.03 million (FY25)
• Highlights vulnerability in critical supply chain components.

Policy Response and Way Forward

• Government is exploring new capital subsidy schemes for wafers and ingots.
• Aim is to boost domestic capacity and reduce reliance on imports in upstream segments.
• While downstream manufacturing is advancing, upstream bottlenecks remain a key hurdle, requiring targeted policy support and investment for full solar supply chain self-reliance.

Source: IE | FE