India’s Solar Manufacturing Push Backfires as Panel Factories Shut Down
By Irina Slav - Jul 23, 2026, 2:30 AM CDT
India ran into an obstacle in its ambitions to boost solar generation as local factories began to shut down because of component shortages, Reuters reported today, citing unnamed industry sources.
The shortages are the result of new legislation seeking to reduce India’s dependence on solar technology imports from China and are putting investments worth some $4 billion at risk, the sources said. Since June 1, when the new legislation took effect, close to a third of India’s small and medium solar module makers have shut shop. The small and medium segment of the industry makes up 60% of the total.
“We have suffered a lot due to the domestic cell unavailability for the past three months,” one solar panel maker said, as quoted by the publication. He expects production of solar modules to drop from 3.2 GW to just 1 GW as a result of the new legislation’s entry into effect.
The legislation in question mandates that India’s solar module makers only use domestically produced cells for solar panels. At the time, the industry warned the government that this would lead to higher module prices and slow down the rollout of solar capacity, because local cell manufacturing capacity is below demand, with the gap at some 2.6 GW annually. Imports from China accounted for over 90% of the cells used by Indian module makers before the new law came into effect.
India’s government has a target of 500 GW of non-hydrocarbon generation capacity by 2030 and the latest developments will likely interfere with that. Solar accounts for 29% of the country’s non-hydrocarbon generation capacity, Reuters noted in its report. Plans were to expand it from 162 GW currently to over 292 GW by 2030. This target is now under threat because while local module capacity is substantial, at 200 GW, solar cell manufacturing capacity is just 27 GW.
By Irina Slav for Oilprice.com
