Solar project costs in Raj likely to go up 30% with local-cells-only policy

Jaipur: Solar project costs are set to rise by over 30% as a mandate on domestically-manufactured cells takes effect from June 1, triggering concerns over supply crunches, higher tariffs and execution.

Under the Domestic Content Requirement (DCR) framework, developers are required to source solar cells only from approved Indian manufacturers starting June 1. Solar panels made with cheaper imported solar cells will no longer be allowed.

While the policy is intended to boost local manufacturing and cut import dependence, industry representatives said domestic cell capacity remains insufficient to meet the fast-growing demand, raising the risk of bottlenecks as projects scale up.

Vendors implementing rooftop systems under the Central govt’s PM Surya Ghar Yojana, as well as projects for industrial and commercial clients, said demand has surged sharply over the past month for cheaper non-DCR panels made with imported cells.

“While we support the Centre’s push to promote indigenous cell manufacturing, the short deadline will push up solar panel prices by over 30%. Manufacturers have little time to scale up production to meet demand, and this could dent consumer interest,” said Sailesh Garg, vice president of Rajasthan Solar Association.

The industry estimates that, currently, the actual domestic solar cell manufacturing capacity stands at around 10,000 MW, though on paper it is projected at nearly 30,000 MW.

India added 38,000 MW of solar capacity in 2025, underlining the gap between domestic cell manufacturing capacity and market demand. The supply shortage has also pushed up DCR panel prices.

Industry representatives said that wholesale non-DCR modules are available at Rs 13-15 per watt, while DCR modules are often quoted at Rs 22 per watt or more because of higher domestic manufacturing costs and limited cell availability.

Garg said an independent assessment should be conducted by the Centre to evaluate the existing DCR module manufacturing capacity and demand before implementing the deadline.

The impact is expected to ripple through the entire value chain and ancillary manufacturing sector, including industries producing frames, junction boxes and other components, as they may be forced to scale down production.

The industry also fears a further rise in DCR module prices, as the market is concentrated among only a handful of players, estimated at around five to seven manufacturers. DCR modules already command a significant premium, and prices are expected to rise further.