The government on Wednesday extended its domestic sourcing mandate for solar equipment to include wafers and ingots, with implementation beginning from June 2028. The requirement to use domestically manufactured ingots and wafers will primarily apply to government-backed and utility-scale projects, commercial and industrial projects, as well as schemes such as PM Surya Ghar.

At present, the domestic sourcing mandate largely covers solar PV modules while components like cells, wafers, ingots and polysilicon could be imported. However, the mandate to use domestically manufactured solar cells in clean energy projects will come into force from June this year.

Cutting import dependence

With this extension to include wafers and ingots, the government aims to reduce heavy import dependence on these critical components and boost domestic manufacturing.

While India has witnessed considerable growth in solar module and cell manufacturing capacity, upstream segments such as polysilicon refining as well as ingot and wafer manufacturing continue to face challenges.

India currently has 172 gigawatts of solar modules and 27.2 GW of cell manufacturing capacity. However, the installed ingot and wafer manufacturing capacity in the country is very limited and stands at around 2 GW.

Wafers represent a critical intermediate stage in the solar manufacturing value chain. Polysilicon is first processed into ingots, which are then sliced into wafers. These wafers are used to manufacture solar cells, which are subsequently assembled into modules.

Domestic wafer rollout norms

As per an office memorandum issued by the Ministry of New and Renewable Energy (MNRE), the list of domestic wafer manufacturers will be notified only after at least three independent manufacturing units — without any common ownership or control — are available, with a combined capacity of at least 15 GW.

MNRE maintains an Approved List of Models and Manufacturers (ALMM) for solar components such as modules and cells, which specifies the domestic manufacturers eligible to supply for such projects. After this extension, a separate ALMM List-III will be created for wafers.

To qualify for inclusion in the ALMM list for wafers, manufacturers must also have ingot manufacturing capacity equivalent to their wafer production capacity.

The memorandum outlines a cascading sourcing requirement: projects covered under ALMM must procure solar PV modules from manufacturers listed in ALMM List-I. These modules must use solar cells from ALMM List-II, and in turn, those cells must be made using wafers sourced from manufacturers listed in the new ALMM List-III.

However, transitional exemptions have been provided. Projects that are mandated to use domestically manufactured modules and cells will be exempt from using domestically manufactured wafers if their last date of bid submission falls on or before the ‘cut-off date’ — defined as seven days after the first ALMM list for wafers is published.

Additionally, projects that submitted bids or signed power purchase agreements (PPAs) before the cut-off date will continue to enjoy this exemption, even if they issue tenders for EPC, module, or cell procurement after the cut-off date.

For all projects where the bid submission deadline falls after the cut-off date, tender documents must explicitly mandate that solar modules, cells, and wafers be sourced from manufacturers listed in ALMM List-I, List-II, and List-III, respectively.

Upstream challenges

Even though India has achieved considerable progress in enhancing solar module manufacturing capacity, the upstream segment of the solar manufacturing ecosystem continues to face challenges mainly due to its capital intensity and price pressures caused by aggressive pricing from China.

The existing PLI scheme for solar PV modules covers both upstream — ingot, wafer and polysilicon — and downstream — solar cell and module manufacturing — segments. However, progress under the PLI scheme has been slower in upstream segments such as polysilicon refining and ingot and wafer production.

Launched in March 2021, the PLI scheme for solar PV modules aimed to install 65 gigawatts (GW) per annum of fully and partially integrated solar PV module manufacturing capacity.

The scheme was initially backed by an outlay of Rs 4,500 crore. In 2022, an additional budget allocation of Rs 19,500 crore was approved, bringing the total sanctioned outlay to Rs 24,000 crore across two tranches.

A joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research shows that operationalisation of PLI-awarded facilities has revealed significant implementation and execution gaps. While downstream segments such as module assembly have seen progress, upstream segments like wafer and polysilicon manufacturing have lagged behind.

The report, which was released in December 2025, also says that about 36% of India’s total cell capacity and 24% of module capacity originate from PLI allocations.

According to the report, as of June 2025 the overall operational capacity achieved under the solar PLI scheme was approximately 29% of the total awarded capacity.

Module assembly exhibited the highest capacity-achievement rate at 59%, reflecting stronger progress in downstream manufacturing.

In contrast, the achievement rates for cell manufacturing (22%), wafer-ingot manufacturing (10%) and polysilicon manufacturing (14%) were significantly lower, indicating persistent barriers to upstream capacity realisation.

As per data provided by the MNRE in the parliament, imports of solar PV cells, wafers and polysilicon during FY25 were valued at around $1,641 million, $156 million, and $0.03 million, respectively.

In January, MNRE secretary Santosh Kumar Sarangi told The Indian Express that they are in discussions with the Ministry of Finance to bring out a new capital subsidy scheme for downstream segments such as wafers and ingots.