New solar sourcing rules come into effect in India as the government pushes for self-reliance. Consumers may face higher rooftop solar installation costs
India’s solar sector entered a new phase on June 1 as the government enforced stricter domestic sourcing rules aimed at reducing dependence on imported solar equipment, particularly from China. While the move is expected to strengthen local manufacturing and boost self-reliance, industry stakeholders remain divided over its immediate impact on costs, supply chains and project execution.
Under the revised policy, solar projects operating through net-metering and open-access mechanisms must now use solar cells manufactured by government-approved domestic producers. The requirement expands existing regulations that already mandated the use of Indian-made solar modules.
The new rule applies to rooftop solar installations, including those under the PM Surya Ghar: Muft Bijli Yojana, as well as open-access projects used by commercial and industrial consumers.
A solar panel is made up of multiple solar cells that convert sunlight into electricity. While India has significantly expanded its solar module manufacturing capacity in recent years, a large portion of the solar cells used inside those modules continues to be imported, mainly from China.
With the implementation of the Approved List of Models and Manufacturers (ALMM) List-II framework, developers can now source solar cells only from approved domestic manufacturers for eligible projects.
The government has rejected industry requests for a blanket extension, making compliance mandatory from June 1.
The move is part of India’s broader strategy to develop a fully integrated domestic solar manufacturing ecosystem.
Although India currently possesses nearly 200 GW of annual solar module manufacturing capacity, domestic solar cell production stands at only about 30 GW. The government believes the new requirement will encourage fresh investments in solar cell manufacturing, reduce import dependence and support India’s long-term clean energy goals.
Officials also see the policy as a strategic step towards strengthening energy security and reducing exposure to global supply chain disruptions.
Industry experts expect rooftop solar installations to become more expensive in the short term.
According to estimates, the use of domestically manufactured cells could increase installation costs by around ₹3,000 per kilowatt. For a typical 5-kW residential rooftop system, consumers may have to spend approximately ₹15,000 more than before.
Developers have also expressed concerns about potential supply constraints as domestic cell manufacturing scales up to meet rising demand.
However, consumers installing systems under the PM Surya Ghar scheme will continue to receive government subsidies, although compliance checks and documentation requirements are expected to become more stringent.
Despite higher upfront costs, solar energy remains financially attractive over the long term due to substantial savings on electricity bills over the lifespan of the system.
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