Stuck between the two, the government is trying to strike the right balance. “We want the domestic industry to be protected and on the other hand we also hope to make solar power available at cheaper rates and grid parity to be achieved quite soon,” said Tarun Kapoor, joint secretary, ministry of new and renewable energy.

For phase two, the government plans to keep aside a certain amount of projects to be developed from domestic content. Senior officials say this is likely to be just 200-250 MW out of 750 MW, which will be tendered out in May.

According to the guidelines of the first phase of the solar mission under which the above mentioned companies commissioned their projects, producers could either mandatorily source CSi (crystalline silicon) solar cells from the domestic market or source thin-film technology from any country.

Because of the lower cost and the belief that thin film technology works better in a hot climate, producers preferred to buy imported solar panels which made manufacturers cry foul. Producers also said domestic solar cells were less efficient and with Indian cell prices going up, higher project costs put the viability of the projects under tremendous pressure.

“Indian cells have an efficiency of 15.5 to 16.5% whereas internationally, cells are available with an efficiency of above 17%. Low efficiency cells involve higher project cost,” said one of the letters seen by ET.

In the last batch of the projects sanctioned in the first phase, 75% of the projects used thin-film technology imported from the US, China, Taiwan etc., as this type of solar panel is not manufactured in India. That is when domestic manufacturers filed an anti-dumping case against these countries. The amount of imports of solar cells and modules in India increased from 920 MW in 2011 to 1,050 MW in 2012.

Source: ET