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					</table>The PM Surya Ghar: Muft Bijli Yojana and the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) are the government’s key initiatives to help homeowners and farmers become energy prosumers. However, the increasing cost and limited supply of solar modules complying with domestic content requirements (DCR) threaten these programs’ progress.
DCR module prices have <a href="https://www.mercomindia.com/anti-dumping-solar-glass-module-price-increases/" target="_blank" rel="noopener">surged</a> following the Ministry of Finance’s decision to impose provisional anti-dumping duties on solar glass imports from China and Vietnam. This move added approximately ₹450 (~$5.30) per 540 W–550 Wp module, resulting in a price increase of ₹0.80 (~$0.0094)/W–₹0.90 (~$0.011)/Wp. Some domestic manufacturers increased prices by ₹2 (~$0.024)/W–₹2.5 (~$0.029)/Wp.
Manufacturers attribute the price hikes to the cascading effects of anti-dumping duties and logistical challenges. However, developers argue that the price increases are disproportionate to the actual cost impact.
DCR Cell Prices: A Growing Concern
Ajay Yadav, President of the Renewable Energy Association of Rajasthan, highlighted that DCR cell prices are ₹13.75 (~$0.16)/Wp, compared to just ₹3.75 (~$0.043)/Wp for imported cells. He noted, “You can also purchase solar modules in the international market at ₹8 (~$0.092)/Wp, while in India, the price of DCR modules increased by ₹4 (~$0.046)/Wp just in the last six months.”
“With such high DCR cell prices, government subsidies may not deliver proportional value. Instead, these subsidies might inadvertently support inefficiencies or enable excessive profits. Manufacturers need to provide transparent cost breakdowns to justify these elevated prices,” Yadav said.
However, a solar cell manufacturer noted that comparing China and India is unfair as China’s centralized manufacturing model significantly differs from other nations. By leveraging vast production capacities and an efficient supply channel across the solar value chain, Chinese companies pressure international customers to push their governments toward supporting Chinese products. However, many of these products are sold at prices below production costs, reflecting an intentional strategy to dominate markets.
“Indian manufacturers face stiff competition against these artificially low Chinese prices while grappling with challenges like underdeveloped local supply chains and manufacturing capacity for critical components such as gases, chemicals, and silver paste,” the manufacturer noted.
Despite these obstacles, Indian manufacturers are reinvesting profits to expand production capacity and strengthen the domestic solar ecosystem. The manufacturer also noted that the industry expects domestic cells to be competitive with Chinese standard prices within a year.
Unrealistic benchmark costs
The benchmark costs considered for a 1 kW rooftop solar system under the PM Surya Ghar program is ₹50,000 (~$580) for providing subsidies for systems up to 2 kW. For systems over 2 kW and up to 3 kW, the benchmark cost is ₹45,000 (~$522).
Under the program, a subsidy of ₹30,000 (~$361)/kW will be <a href="https://www.mercomindia.com/cabinet-approves-new-rooftop-solar-subsidy-program" target="_blank" rel="noopener">provided</a> for systems up to 2 kW for applications submitted after February 13, 2024. An additional ₹18,000 (~$217)/kW will be available for systems of over 2 kW and up to 3 kW capacity. The total subsidy will be capped at ₹78,000 (~$939).
“MNRE has set an official benchmark cost of ₹0.50 ($0.0058)/W for the first 2 kW and ₹0.45 ($0.0052)/W for the next 1 kW, with subsequent reductions in per watt costs made without sufficient due diligence,” said Yadav.
Yadav pointed out that the rates displayed on the PM Surya Ghar portal are approximately 20-30% lower than the prevailing market prices of DCR solar modules. He noted that since these benchmark figures are widely referenced in awareness campaigns and official documents, they create unrealistic cost expectations among consumers. As a result, when vendors provide market-driven quotations, it often leads to mistrust and dissatisfaction.
In response to a right-to-information query, MNRE stated that these benchmark prices were determined through &#8220;various stakeholder consultation meetings with solar players.&#8221; However, Yadav questioned the lack of transparency regarding the methodology used for these calculations and whether the vendors responsible for implementing these projects were consulted.
PM Surya Ghar Yojana’s operational guidelines specify that benchmark costs will be revised during the program’s mid-term review to reflect market trends or sooner if there is a significant increase in module prices due to unforeseen circumstances. The revision will account for changes in solar module prices, inverter costs, and other system expenses as per the methodology defined by MNRE.
However, Yadav highlighted that despite a six-month surge in DCR solar module prices, MNRE has not revised the benchmark cost.
Supply-Demand Gap 
In addition to rising costs, the solar energy sector is grappling with frequent supply disruptions of DCR modules. Yadav notes that these disruptions often occur every two weeks, delaying project timelines and creating difficulties for vendors and consumers alike.
A rooftop solar installer explained that these delays make it challenging to complete installations on time, leaving consumers dissatisfied. Many consumers have already secured loans for solar systems, and loan repayments have begun, but installations remain incomplete due to module shortages.
The installer noted that tier-1 module manufacturers prioritize catering to PM-KUSUM projects because of large capacity orders. This focus has delayed the supply of modules required for the PM Surya Ghar program. The installer hoped the current shortage would ease by April once manufacturers fulfill their commitments for earlier projects.
Yadav noted that several leading brands have failed to supply DCR modules, due to which vendors are unable to fulfill their consumer commitments. This situation has created widespread frustration and tarnished the program’s credibility.
Indian manufacturers claim a cell production capacity of 6 GW, with an additional 15 GW ready for commissioning. But these numbers fail to reflect in the market. Instead, manufacturers cite “lower demand” as a justification for production delays, raising critical questions about their operational efficiency and market alignment.
As of June 2024, India’s cumulative solar cell manufacturing capacity totaled 7.6 GW, according to Mercom India’s <a href="https://www.mercomindia.com/product/state-solar-manufacturing-india-1h-2024" target="_blank" rel="noopener">State of Solar PV Manufacturing in India 1H 2024.</a>
A module manufacturer highlighted that the primary reason for the shortage is the limited availability of DCR cells. Many cell manufacturers have entered into contracts, which has resulted in a major portion of the available stock being allocated to those agreements. Consequently, other buyers, including smaller players, struggle to procure cells for their needs.
The cell shortage is exacerbated by the high demand generated by government programs like the PM Surya Ghar program and the PM-KUSUM initiative, especially since these programs often require larger quantities of DCR modules.
Module manufacturers say the problem will improve only when cell production capacity increases. Many manufacturers plan to expand their capacity, with larger facilities expected to come online next year. Once this happens, the supply-demand gap should begin to narrow. However, until then, the shortage will persist despite high demand and willingness to pay a premium for DCR modules.

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