India’s ambition to become a global solar manufacturing powerhouse has gained remarkable momentum in recent years, thanks largely to the Production Linked Incentive scheme for high-efficiency solar PV modules. The policy was conceived as an intervention that would reshape the nation’s renewable energy trajectory by building domestic capability across the solar value chain. Three years on, the latest findings from JMK Research show that while the scheme has sparked unprecedented expansion, it now stands at a crossroads where structural weaknesses threaten to erode the very gains it has delivered.
There is no denying the magnitude of India’s manufacturing rise. From 2022 to mid-2025, the country’s operational capacity surged to 120GW for modules and 29.3GW for cells. These milestones represent one of the fastest scaling episodes in India’s renewable sector, with module capacity rising by 216 per cent and cell capacity by 344 per cent compared to 2022 levels. Much of this acceleration is rooted in the PLI programme, which has channelled targeted government support into stages of the value chain once considered unviable without imports. Nearly a quarter of all module capacity and more than a third of cell capacity now originate from PLI allocations, underscoring the programme’s central role in reshaping India’s industrial landscape.
Despite this progress, the report highlights a troubling mismatch between India’s ambitions and its structural limitations. The limited polysilicon and wafer capacities built so far exist only because of the PLI scheme. These facilities are too few to offset the overwhelming dependence on global suppliers, particularly China, which controls the upstream solar supply chain. This reliance has exposed Indian manufacturers to sharp price swings in polysilicon and wafers, making year-to-year planning extremely difficult and undermining their ability to compete on cost.
Implementation challenges compound these vulnerabilities. The PLI scheme’s focus on fully integrated facilities, while conceptually aligned with long-term self-reliance, requires massive upfront capital investment. Yet the incentives themselves cover only a small portion of production costs, leaving companies to shoulder substantial risk. This imbalance slows down the establishment of upstream plants, which are the most capital-intensive segments of the chain and crucial for true manufacturing independence.
Broader policy inconsistencies have further complicated the landscape. The coexistence of unrestricted imports for polysilicon and wafers with tight restrictions on module imports under the ALMM framework has created an uneven playing field that affects investment decisions. Frequent revisions to ALMM norms have introduced additional uncertainty, unsettling manufacturers who require stability while setting up large facilities with long gestation periods. These inconsistencies reflect a broader need for alignment across trade, industrial and renewable energy policies, without which domestic capacity will continue to lag upstream requirements.
Beyond policy design, operational delays have emerged as a major bottleneck. India’s dependence on imported machinery, specialised components and foreign technical expertise has slowed capacity ramp-up, particularly in wafering and cell manufacturing. Visa restrictions affecting technical personnel, along with limited global availability of advanced manufacturing equipment, have stalled commissioning timelines. As a consequence, only 31GW of the 65GW targeted module capacity has been commissioned so far. The shortfall is stark when compared with original expectations of ₹94,000 crore in investments and nearly two lakh direct jobs. Actual outcomes — ₹48,120 crore in investment and 38,500 jobs — remain well below targets.
These delays carry heavy financial consequences for PLI beneficiaries. According to the report, non-compliance risks amount to nearly ₹41,834 crore, driven by potential penalties, encashment of bank guarantees, loss of incentive eligibility and unrealised revenue from delayed sales. In an environment characterised by tight margins and aggressive global pricing, such financial exposure could deter future participation in upstream expansions.
Looking forward, the report argues for a comprehensive recalibration of the PLI framework rather than incremental adjustments. Improving cost competitiveness must be central to this effort. Measures such as production tax credits, low-cost financing and sovereign-backed risk buffers against global commodity volatility could significantly strengthen India’s manufacturing foundation. Policy designers will also need to introduce layered incentives that support diversified participation across the value chain, ensuring that upstream segments grow at a pace aligned with module and cell output. Long-term policy certainty is equally essential, particularly for manufacturers who are considering large-scale investments in polysilicon and wafering.
The global environment adds another layer of urgency. With US tariffs on Indian module exports poised to rise to 50 per cent, the competitive landscape is shifting rapidly. Indian manufacturers, many of whom are still scaling operations, now face reduced access to a promising export market. This development underscores the need for robust domestic policy coordination and mechanisms that protect the industry from external shocks.
India has shown that it can build solar manufacturing capacity at unprecedented scale. The challenge now is to build depth, resilience and competitiveness. If policymakers can align incentives, stabilise the trade environment and support upstream integration, the solar PLI scheme could become a foundational pillar of India’s clean energy transition. If not, it risks becoming a moment of impressive growth that fell short of securing long-term industrial independence.
