Can Make In India Hurt? DCR Shortages Offer An Unhappy Picture

A Shortage of DCR modules is beginning to hurt capacity additions in key government scheme sin India

One of the biggest success stories of the Modi government has been the capacity additions in renewable energy, particularly solar energy. From less than 3 GW in 2014, solar capacity today is over 107 GW. Similarly, solar manufacturing capacity has grown from small, sub-GW levels to over 80 GW in Modules, and 25 GW in cells. Ironically, a significant part of this success is owed to Chinese solar manufacturers who brought prices crashing down with scale and innovation, allowing India, and many other countries to recalibrate their renewable targets upwards. However, it is the same fear of Chinese dominance that forced countries to try and build manufacturing heft at home as well.

For India, it is this manufacturing push, especially the cell manufacturing part, that is beginning to hurt, not just irritate. Backed by a slew of government backed support in the firm of tariffs (40% on imports for modules, 25% on cells), non-tariff (ALMM, or An Approved List of Module Manufacturers that is 99% Indian firms when we last checked) and direct incentives like PLI have backed this rise in manufacturing.

Perhaps the most contentious has been the mandate for using DCR modules, or modules with domestically manufactured cells, brought in to provide final, market demand support. This Domestic Content Requirement is proving to be a major drag on the markets now, as cell capacity has simply failed to keep up with module capacity growth. While figures as high as 25 GW have been quoted for domestic cell manufacturing capacity, a number that should be good enough to meet domestic demand, what has been ignored is the far higher complexity in cell manufacturing, which has driven firms to take longer times to stabilise production. We have covered the issue in detail in our January cover issue three months back, and clearly its only got worse since. Or this more detailed story in November last year that looked at the rise of cell manufacturing and challenges. Unfortunately, the technical and manpower linked challenges seem to have come home to roost.

Add to that the export opportunity in markets like the US, which have also sought to block Chinese origin cells in modules, and some of our biggest cell (and module) makers are keener to export for the higher margins. And to think ALCM for cells is due to kick in from June 2026.

Ground Situation

A simple ground check across dealers and small EPCs shows just how bad the shortage is. While everyone has cited a delay of between 2 weeks and 8 weeks for deliveries depending on volumes required, the shocker is that this is true for small projects under PM Suryaghar as well. While we heard Nikhil Nahar, Co-Founder, Solar Square call it ‘ a good problem to have ” at the Solar Trailblazers event in Pune early this month, many smaller EPCs don’t see it like that anymore. These solar entrepreneurs point out that as compared to earlier, margins have also shrunk significantly, making it imperative that they have as low downtime as possible to keep business going.

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The government’s tracking mechanism has also failed to resolve issues quickly, as customers stuck due to duplicate panels, or the same serial numbers being shown as already used on the tracking system also twiddle their thumbs waiting for resolution. The worsening of shortages after the tracking system came in also makes one wonder about the extent of mislabelling that was underway before.

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Ajay Yadav, President of the Renewable Energy Association of Rajasthan is even goes as far as proposing a 6 month boycott of PM Suryaghar, the government’s flagship solar scheme for retail. He asserts that this is the only way to bring about a semblance of normalcy to the market, and a strong enough reason for the government to act. He has been advocating limiting DCR madates for projects upto 3 kW earlier.

The shortage is over and above the other problems with DCR modules, which is a 100% premium over Non-DCR modules, as shared in the stories we have done earlier.

Will 2025-26 Survive The Shortages?

After a fantastic Fy25 with almost 25 GW of solar capacity added, it was considered almost a given that the story will repeat itself in FY26 with an improvement even on the Fy25 numbers. The optimism was based on the strong surge in solar rooftop segment powered by PM Suryaghar and faster C&I additions. Right now, that story looks headed the wrong way due to the shortages, which would be a serious setback to India’s 2030 ambitions as well as all the stakeholders trying to make it happen. Can the government afford to wait and watch? We will know soon enough.

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