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Indian has around 2 GW of domestic manufacturing capacities, inclusive of 16 solar cell manufacturers, which only half have a manufacturing capacity of 100 MW or higher.  Domestic manufacturing is insufficient to meet domestic content requirements, as many tenders seeks for indigenous built cells and modules and there are limited suppliers that meet ALMM standards . Also domestic module manufactures reach Chinese manufactures to supply cells as domestic cells not comes at par in terms of quality and technology. Domestic cells are 20% costly than imported cells.

Investors shy away from investing in building solar cell capacity in India, due to inconsistent policies and huge manufacturing cost associated with it. Manufacturing cells is a complicated, multi-stage process, and requires extensive capital investment. Also this has to be backed by government support like providing of capital incentives, so as to have the same economies of scale to compete with imported cell prices. There also lies a risk of obsoletion of technology in period of 9-10 month, thus making the process even more capital intensive.

Government initiatives like introducing safeguard duty, domestic content requirement (DCR) policy, and the approved list of models and manufacturers (ALMM) is certain to  improve indigenous capacities and remove dependence on imports from China and Malaysia. Domestic manufacturing should not only be limited to developing solar components like cells, modules, ingots, and wafers but also to venture into manufacturing ancillary equipment like back sheets, inverters, transformers, etc. Banks should be encouraged to finance solar manufacturing facilities. Only stable government policies can build confidence in the investors.