Jaipur: Solar project costs are expected to increase by more than 30 percent following the implementation of a mandate requiring domestically manufactured solar cells starting June 1. This policy shift has raised concerns about supply shortages, higher tariffs, and project execution delays.
Domestic Content Requirement Framework
Under the Domestic Content Requirement (DCR) framework, developers must now source solar cells exclusively from approved Indian manufacturers. Solar panels that were previously made with cheaper imported cells will no longer be permitted. While the government aims to boost local manufacturing and reduce dependence on imports, industry representatives argue that domestic cell production capacity is insufficient to meet the rapidly growing demand, creating a risk of bottlenecks as projects scale up.
Impact on Rooftop and Commercial Projects
Vendors implementing rooftop systems under the central government's PM Surya Ghar Yojana, as well as projects for industrial and commercial clients, have reported a sharp surge in demand over the past month for cheaper non-DCR panels made with imported cells. Sailesh Garg, vice president of the Rajasthan Solar Association, stated, "While we support the Centre's push to promote indigenous cell manufacturing, the short deadline will push up solar panel prices by over 30 percent. Manufacturers have little time to scale up production to meet demand, and this could dent consumer interest."
Capacity vs. Demand Gap
The industry estimates that the actual domestic solar cell manufacturing capacity currently stands at around 10,000 megawatts (MW), although on paper it is projected at nearly 30,000 MW. India added 38,000 MW of solar capacity in 2025, highlighting the significant gap between domestic cell manufacturing capacity and market demand. This supply shortage has already driven up DCR panel prices.
Price Disparity
Industry representatives noted that wholesale non-DCR modules are available at Rs 13 to Rs 15 per watt, while DCR modules are often quoted at Rs 22 per watt or more due to higher domestic manufacturing costs and limited cell availability. Garg called for an independent assessment by the central government to evaluate existing DCR module manufacturing capacity and demand before enforcing the deadline.
Ripple Effects Across the Value Chain
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.
