Solar power: What will it take to build the full value chain?

In August 2026, India’s installed solar capacity reached 168 GW, with a record 44.61 GW added in Financial Year 2025-26 alone.

In August 2026, India’s installed solar capacity reached 168 GW, with a record 44.61 GW added in Financial Year 2025-26 alone. A month earlier, the ALMM-II regulations came into force, further nudging the Indian solar power industry toward self-reliance across the solar power ecosystem. The Indian solar power industry now has the right components in place to achieve its 300 GW installed capacity target by 2030.

Solar energy (Unsplash/representative )

However, the next phase must transform this growth into a globally competitive manufacturing ecosystem, integrated with power generation and storage capacity, and backed by indigenous research across the solar power value chain.

Indian solar value chain spans three interconnected layers. The first is integrated module manufacturing, the second encompasses engineering, procurement and construction (EPC), and the third includes operations and maintenance, asset management, energy storage and end-of-life module recycling.

India has made significant progress in module manufacturing over the past five years, with ALMM-enlisted capacity rising more than 12x to 217.1 GW. As a result, module imports fell to $ 2.15 billion in FY2025, down from $ 4.35 billion in FY2024. But the solar manufacturing story takes a twist when you look beyond modules. Cell manufacturing capacity, a critical ingredient in solar modules, was just 31 GW in 2026, with an even wider gap in TOPCon manufacturing. Such gaps will create upstream bottlenecks, expose the Indian solar module manufacturing industry to global disruptions, and affect module prices, project costs, and financial outcomes. The priority must shift from manufacturing scale to depth, capability, competitiveness, and innovation.

Domestic sourcing requirements in the industry are moving upstream, with ALMM-II for solar cells taking effect in June 2026 and ALMM-III for ingots and wafers planned for June 2028. These planned policy decisions will help improve demand visibility, encourage private investment and create commercially viable projects. Solar power projects are capital intensive and have long gestation periods, so they require the ability to keep pace with ever-evolving technologies.

Policy frameworks, such as the production-linked incentive scheme and the ALMM framework, provide the right impetus to the solar power industry. However, this won’t be enough to make the industry globally competitive. Companies must deliver consistent quality, efficient operations and globally competitive costs to create sustainable business models. Financing must also reflect the different investment and risk profiles across the solar power value chain, from wafer facilities to advanced cell lines, module plants, and power-generation portfolios. Vertical integration can strengthen the industry's growth paradigm.

The industry's technological capability will determine its global competitiveness. Indian manufacturers must improve efficiency, yields, material utilisation, and reliability while keeping pace with technologies such as TOPCon, heterojunction (HJT), and emerging perovskite-silicon tandem cells. India must avoid replacing dependence on imported modules with dependence on imported technology. Research & development, academia-industry partnerships, pilot production lines and indigenous intellectual property will be essential. Digitalisation, automation and a skilled workforce are essential to deliver superior quality, production planning and manufacturing performance.

The next growth phase of the industry should start with developing indigenous technologies, commercialising them at scale and eventually becoming a global hub for everything related to the solar power industry.

As solar capacity grows and matures, demand for EPC, project development, asset management, storage, and recycling will grow. The government has already recognised the need for integrated power generation and storage to ensure a consistent supply throughout the day and truly reduce dependence on fossil fuel-based power generation. It is important to assess storage against its full cost, including capital expenditure, efficiency losses, degradation and replacement. Recycling end-of-life modules is another key area, as it can help recover valuable materials, reduce waste and strengthen resource security.

Solar power self-reliance does not mean manufacturing every component domestically and disengaging from global supply chains; it means building competitive capabilities in strategically important areas to reduce critical dependencies and become an integral part of the global supply chain. Government, industry, financial institutions and research organisations must work together – policy should support stable investment conditions, infrastructure, financing and R&D, while industry focuses on innovation, productivity, quality and cost discipline.

India’s next milestone should be measured not only in gigawatts installed or modules manufactured, but also in domestic value created, indigenous technologies developed and the global competitiveness of the industry. The solar power industry has done a great job so far, but it is now time to work towards global leadership.

(The views expressed are personal)

This article is authored by Anuj Agarwal, founder and chairman, SunBridge Group.