Localization mandates set to widen and end lucrative arbitrage for Indian solar cell companies
While some of India's solar module manufacturers are benefitting from selling to cell-less competitors, a push for localization is reshaping the market dynamics ahead of mandatory domestic cell use in 2027.
Summary
While some of India's solar module manufacturers are benefitting from selling to cell-less competitors, a push for localization is reshaping the market dynamics ahead of mandatory domestic cell use in 2027.
Mumbai: India’s solar module manufacturers with cell-making capacity are making a windfall by selling to cell-less competitors. However, a lucrative arbitrage that comes from a shortage of locally made cells is set to end as the government widens its mandate for the use of domestically produced solar cells in new renewable energy projects.
Some of these cell companies themselves rely on imported cells to make modules. This business structure – supplying part of their cell production to other companies while importing cells to run their own module lines – nets these companies better margins, experts said.
The top companies in the B2B cell market are Premier Energies, Tata Power, Adani Solar, Jupiter International, ReNew Photovoltaics and Emmvee Photovoltaic, according to a 4 July report by Harshraj Aggarwal, executive vice president – institutional equity research at Yes Securities. Waaree Energies, one of the largest solar cell makers in India, does not sell in the B2B market.
Apart from Jupiter, which focuses on solar cell production, all these companies have their own module lines that are partly made with imported cells.
“We want to cater to all markets,” said Vinay Rustagi, chief business officer at Premier Energies. “As long as there is a reasonably sized and commercially viable non-DCR (domestic content requirement) market, it makes sense for us to sell some cells externally and produce non-DCR modules using imported cells.”
The other factor to consider is that there are many module manufacturers with no cell capacity. So, selling cells remains an attractive business, he said.
How attractive? Generally speaking, companies make an Ebitda of 8¢ (~ ₹7) per watt-peak when selling cells compared with about 7¢ (~ ₹6) for selling DCR modules, according to one analyst who requested not to be identified. In other words, cell companies make 14-15% more Ebitda by selling cells directly instead of assembling them into modules.
Localization push
Solar panels made using locally produced cells are DCR-compliant while those made from imported cells are called non-DCR. The dichotomy exists because of a government push for increased localization in the solar industry. Only DCR modules get subsidies under various rooftop solar promotion schemes.
India has a glut of module assembly capacity but a shortage of domestic cell production. The approved list of models and manufacturers (ALMM) published by the government in July showed module capacity of just under 210 gigawatts against a little over 30 GW of cell capacity, leaving a wide demand-supply imbalance for locally made cells.
That shortage has kept DCR module prices well above their non-DCR counterparts. Non-DCR panels sold to utilities fetch about ₹15-16 a watt against ₹21-22 for DCR modules, Waaree Energies executives said on its latest investor call on 30 April.
However, this arbitrage has a fixed expiry. Since 1 June, the mandate was extended beyond subsidized segments to government-backed projects, including utility-scale tenders bid after August 2025. Net-metering and open access projects — private installations that use the public grid — were to face the same deadline, but on 18 July the government pushed their cut-off to the year-end after industry pushback. Projects in those segments commissioned from 1 January 2027 must use domestic cells.
This will practically kill the domestic market for non-DCR modules and end this arbitrage for solar cell manufacturers. But the opportunity may linger for another year or two as utility-scale tenders bid before September 2025 can use non-DCR modules and will take some time to build.
Market transformation
Solar cells are thin, rectangular chips the size of a pocket diary that are the building blocks of solar modules. Manufacturing these silicon cells is far more complex and capital intensive than the later step of assembling them into modules. India has about 100 module-making companies compared to just over a dozen cell makers.
“The domestic solar cell sales market has undergone a significant transformation over the past five calendar years, mirroring the rapid expansion of India's cell manufacturing ecosystem,” said Aggarwal from Yes Securities. “The evolving competitive landscape highlights a clear shift toward integrated, well-capitalized manufacturers with captive manufacturing capabilities, strong execution and the ability to serve the growing DCR and ALMM-driven domestic market.”
Tata Power, Adani Solar, ReNew, Emmvee and Waaree Energies did not respond to Mint’s request for a comment.
About the Author
Nehal Chaliawala
Nehal chronicles India’s top conglomerates for Mint. From navigating the complexities of big-bang mergers and large-scale fundraises to decoding high-profile recruitments and seemingly inexplicable corporate pivots, Nehal focuses on unpacking the long-term strategies of the country’s most influential business houses. He aims to provide readers with a clear-eyed view of how these corporate titans shape the broader Indian economy.
His professional journey began at The Economic Times in 2018, where he spent over five years before joining Mint in 2023. Over his career, he has tracked diverse sectors like automobiles, metals, cement, power, infrastructure, and renewable energy. He also keeps a close watch on the intricacies of corporate finance and corporate governance. This wide-ranging sectoral experience allows him to better understand India’s large conglomerates that sit at the confluence of these vital industries.
Nehal studied mechanical engineering from the Pune University and graduated with distinction in 2017. Driven by a passion for storytelling, he pivoted to journalism immediately after, attending the Asian College of Journalism in Chennai. While his time in the newsroom has made him a healthy sceptic, his engineering roots keep him perpetually inquisitive about how things work—and why they fail.
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Source: Livemint — Companies
