Solar Panel & Wind Turbine Manufacturing in India: PLI, ALMM & FDI

India's Renewable Energy Manufacturing: The Investment Case

India has set a target of 500 GW of non-fossil-fuel energy capacity by 2030, up from approximately 203 GW of installed renewable capacity as of December 2025. Achieving this target requires massive expansion of domestic manufacturing capacity for solar panels, wind turbines, and associated components — and the government is deploying an unprecedented combination of financial incentives, trade barriers, and regulatory mandates to make this happen.

For foreign manufacturers, the opportunity is significant: the renewable energy sector permits 100% foreign direct investment under the automatic route, the PLI scheme offers production-linked subsidies worth up to INR 24,000 crore, and India's customs duty framework now provides meaningful protection against Chinese imports that dominate global solar supply chains.

But the regulatory landscape is complex and evolving rapidly. The Approved List of Models and Manufacturers (ALMM) regime creates both market access barriers and opportunities. The new ALMM(Wind) guidelines mandate domestic component sourcing. Customs duties shift frequently. And the interplay between federal incentives and state-level industrial policies requires careful structuring.

This guide covers the complete regulatory and commercial framework for solar panel and wind turbine manufacturing in India, with specific thresholds, timelines, and compliance requirements current as of March 2026.

FDI Framework for Renewable Energy Manufacturing

India's FDI policy is unambiguously supportive of foreign investment in renewable energy manufacturing.

100% FDI Under the Automatic Route

The consolidated FDI policy permits up to 100% FDI in renewable energy generation, distribution, and manufacturing under the automatic route. No prior government approval is required from either the RBI or the Department for Promotion of Industry and Internal Trade (DPIIT). This applies to:

• Solar PV cell and module manufacturing
• Wind turbine and component manufacturing
• Battery storage and energy storage systems
• Balance of System (BoS) components — inverters, mounting structures, cables
• Polysilicon, ingot, and wafer production

The investment flows through the standard FEMA channel: the foreign investor subscribes to shares of the Indian manufacturing entity, and the company files FC-GPR with the RBI within 30 days of share allotment. Annual FLA returns are filed by July 15 each year.

FDI Investment Trends

The renewable energy sector received USD 12.67 billion in cumulative FDI equity inflows as of March 2025. During April 2020 to June 2025, the sector attracted USD 23 billion in total foreign investment, reflecting growing confidence in India's energy transition commitments. Major investors include companies from Singapore, Japan, the US, Germany, and increasingly from the Middle East through sovereign wealth funds.

Entity Structure for Manufacturers

Foreign manufacturers typically incorporate a private limited company or a wholly owned subsidiary (WOS) in India. The subsidiary model provides limited liability, intellectual property protection, and eligibility for PLI incentives. At least one resident director is required. For large manufacturing investments, public limited companies or joint ventures with Indian partners may be considered for strategic reasons, though 100% foreign ownership is the norm.

For a comparison of entity options, see our guide on branch office vs subsidiary structures.

PLI Scheme for High-Efficiency Solar PV Modules

The Production Linked Incentive (PLI) Scheme for National Programme on High Efficiency Solar PV Modules is the centrepiece of India's solar manufacturing strategy. Administered by the Ministry of New and Renewable Energy (MNRE), it provides direct financial incentives to manufacturers who establish domestic production capacity.

Scheme Structure and Budget

The PLI scheme operates in two tranches with a combined outlay of approximately INR 24,000 crore (approximately USD 2.9 billion):

How the PLI Incentive Works

The PLI provides a production-linked financial incentive to selected manufacturers for five years from the date of commissioning of their manufacturing facility. The incentive is calculated as a percentage of sales revenue from domestically manufactured high-efficiency solar PV modules and is disbursed annually based on verified production and sales data.

Key eligibility criteria include:

• Efficiency thresholds: Modules must meet minimum efficiency standards set by MNRE — currently above 20% for monocrystalline PERC/TOPCon technology
• Vertical integration: Higher incentive rates are available for manufacturers who are vertically integrated from polysilicon or ingot/wafer stage through to modules (as opposed to module-only assemblers)
• Commissioning deadlines: Tranche II capacity must be commissioned in phases — 7,400 MW by October 2024, 16,800 MW by April 2025, and 15,400 MW by April 2026
• Domestic value addition: The scheme rewards manufacturers who use domestically produced cells, wafers, and polysilicon

Tranche II Beneficiaries

The 11 companies selected under Tranche II represent a mix of established manufacturers and new entrants:

• Established manufacturers: Waaree Energies, Vikram Solar, Tata Power Solar
• Conglomerate entries: Reliance New Solar Energy (polysilicon to module), JSW Renewable Energy, Adani Solar
• New entrants: ReNew Solar, Grew Energy, Avaada Ventures, Ampin Energy Transition, Indosol Solar
• Foreign-owned: First Solar (US-based) — the only foreign-owned company to secure PLI allocation, in the polysilicon-to-module category

Current Progress (as of March 2026)

As of June 2025, the PLI scheme had driven 18.5 GW of solar PV module manufacturing capacity into operation, along with 9.7 GW of solar cell capacity and 2.2 GW of ingot/wafer capacity. Total committed investment under the scheme stood at INR 48,120 crore, generating approximately 38,500 direct jobs. The remaining 15,400 MW of Tranche II capacity is being commissioned through April 2026.

ALMM: The Market Access Gateway for Solar

The Approved List of Models and Manufacturers (ALMM) is India's market access mechanism for solar modules and cells. Established by MNRE, it determines which manufacturers can supply equipment for government projects, government-assisted projects, open access installations, and net-metering projects across India.

ALMM Structure

ALMM operates through two lists:

• ALMM List-I (Solar PV Modules): Lists approved models and manufacturers of solar PV modules. As of October 2025, this list covered 119.8 GW of module manufacturing capacity from over 100 manufacturers across 123 facilities
• ALMM List-II (Solar PV Cells): Lists approved models and manufacturers of solar PV cells. This list becomes mandatory from June 1, 2026 — after that date, module manufacturers in List-I must source cells from List-II manufacturers or face delisting

June 2026 Cell Sourcing Mandate

The most consequential upcoming change is the mandatory cell sourcing requirement. After May 31, 2026:

• Module manufacturers from ALMM List-I that do not source cells from ALMM List-II will be moved to a separate ALMM List-I(a)
• List-I(a) manufacturers will have restricted market access compared to List-I manufacturers
• Only cells produced in India using undiffused silicon wafers qualify as "domestically manufactured" — cells made from imported diffused wafers do not meet the Domestic Content Requirement (DCR)

This mandate is designed to push the domestic value chain upstream from module assembly (which India has scaled rapidly) to cell manufacturing and eventually to wafer and polysilicon production.

How to Get Listed on ALMM

Manufacturers must apply to MNRE with documentation including BIS certification for their modules, factory inspection reports, efficiency test certificates from NABL-accredited laboratories, and capacity declarations. The listing process typically takes 2-4 months. ALMM listing must be renewed periodically, and MNRE can delist manufacturers who fail to meet quality or compliance standards.

ALMM(Wind): New Domestic Manufacturing Mandate

In a parallel development to solar, the wind sector received its own manufacturing localisation mandate through the ALMM(Wind) guidelines, effective July 31, 2025.

Key ALMM(Wind) Requirements

The ALMM(Wind) regulations impose several significant requirements on wind turbine manufacturers:

• Component sourcing: Wind OEMs must source key components — blades, towers, gearboxes, generators, and special bearings (which constitute 65-70% of total turbine cost) — exclusively from ALMM(Wind Turbine Components) listed suppliers
• Data localisation: Wind turbine data and control systems must remain within India, using local data centres, servers, and R&D facilities
• Cybersecurity compliance: Enhanced security requirements for SCADA systems and turbine control software
• Manufacturing capacity utilisation target: The policy aims to increase domestic capacity utilisation from the current 25-30% to 70-80%

Impact on Foreign Wind OEMs

Major global wind turbine manufacturers — Vestas, Siemens Gamesa, GE Vernova, Nordex, and Envision — all have existing manufacturing operations in India. The ALMM(Wind) regulations compel these manufacturers to deepen their domestic supply chains rather than importing critical components. For new entrants, the regulations mean that manufacturing viability requires securing ALMM-listed component suppliers before establishing assembly operations.

Unlike solar, there is currently no dedicated PLI scheme for wind turbine components, though the 2026 Budget included support measures such as reduced customs duty on forged steel rings for main-shaft bearings — a critical component for ALMM-compliant turbines.

Customs Duty Framework

India's customs duty structure for renewable energy equipment is designed to protect domestic manufacturing while keeping project costs manageable.

Solar Equipment Duties

The 2026 Budget removed customs duties on solar glass inputs, lithium battery cell machinery, and critical minerals processing equipment — further incentivising domestic manufacturing of upstream components.

Wind Equipment Duties

Wind turbine components face lower customs protection compared to solar:

• Complete wind turbines: 0% BCD (nil duty to keep project costs low)
• Key components (blades, nacelles, towers): 0-5% BCD
• Forged steel rings for bearings: 5% BCD (reduced in 2026 Budget to support ALMM(Wind) compliance)
• Gearbox and generator components: 5-7.5% BCD

The lower customs protection for wind reflects India's established domestic wind manufacturing base — unlike solar, where China dominates global supply chains, India has significant indigenous wind manufacturing capacity from companies like Suzlon, Inox Wind, and local operations of global OEMs.

GST Treatment for Renewable Energy Equipment

The GST rate on renewable energy equipment was reduced from 12% to 5% effective September 22, 2025, covering solar modules, cells, and related renewable devices. This 7-percentage-point reduction lowers capital costs by approximately 5% for solar and wind projects, improving the economics for both manufacturers (through increased demand) and project developers.

For manufacturers, key GST compliance considerations include:

• GST registration in each state where manufacturing facilities are located
• Input Tax Credit (ITC) claims on raw materials, capital goods, and services
• E-way bill compliance for inter-state movement of equipment
• Monthly GSTR-1 and GSTR-3B filings, quarterly or annual returns depending on turnover

State-Level Incentives and Industrial Policies

Beyond federal incentives, several Indian states offer additional benefits to renewable energy manufacturers:

Key Manufacturing Hubs

The choice of manufacturing location should consider not only state incentives but also proximity to raw material suppliers (especially for ALMM compliance), port access for export, availability of skilled labour, and renewable energy resource quality (for captive power generation).

Environmental and Regulatory Approvals

Setting up a manufacturing facility requires several additional approvals beyond FDI and corporate registration:

• Environmental Clearance: Required for manufacturing units above specified capacity thresholds under the EIA Notification 2006. Solar module assembly may fall below the threshold; polysilicon and chemical processing facilities typically require full EIA
• Factory licence: Under the Factories Act, 1948, for any premises with 10+ workers using power or 20+ workers without power
• BIS certification: Mandatory for solar modules sold in India under IS 14286 and IEC 61215/61730 standards
• Pollution control board consent: Consent to Establish (CTE) before construction and Consent to Operate (CTO) before production
• Fire safety clearance: From the state fire department
• Building plan approval: From the local municipal authority or industrial development authority

Tax Incentives for Manufacturers

Beyond PLI, several tax benefits are available to renewable energy manufacturers:

Concessional Corporate Tax

New manufacturing companies incorporated on or after October 1, 2019, and commencing production before March 31, 2024 (extended for certain sectors), can opt for a concessional corporate tax rate of 15% (effective rate approximately 17.16% including surcharge and cess) under Section 115BAB. This is one of the lowest corporate tax rates in Asia and applies to the company's entire income from manufacturing activities.

SEZ Benefits

Manufacturing units established in Special Economic Zones (SEZs) receive income tax exemptions — 100% exemption on export profits for the first 5 years, 50% for the next 5 years, and 50% of ploughed-back profits for a further 5 years (under Section 10AA, subject to sunset provisions). Custom duty exemptions on imported raw materials and capital goods also apply within SEZs.

Accelerated Depreciation

Manufacturing equipment qualifies for accelerated depreciation at 15-40% depending on the asset class, reducing taxable income in the early years of operation. For renewable energy generation assets (if the manufacturer also generates power), 40% depreciation is available.

Setup Roadmap for Foreign Manufacturers

For a foreign solar or wind equipment manufacturer entering India, the recommended sequence is:

1. Market assessment and site selection: Evaluate state incentives, proximity to ALMM-listed suppliers, port access, and land availability. Engage with Invest India and state industrial development corporations for facilitation
2. Entity incorporation: Register a private limited company via SPICe+. Appoint at least one resident director. File FC-GPR within 30 days of capital infusion
3. Regulatory approvals: Obtain environmental clearance, factory licence, BIS certification, pollution control consents, and fire safety clearance. Timeline: 3-8 months depending on state
4. ALMM registration: Apply for ALMM List-I (modules) and/or List-II (cells) listing with MNRE. Ensure efficiency standards and quality certifications are in place. Timeline: 2-4 months
5. PLI application: If additional PLI tranches are announced, apply with capacity commitments and investment plans. First Solar's selection in Tranche II demonstrates that foreign-owned manufacturers are eligible
6. Construction and commissioning: Build the manufacturing facility, install production lines, conduct trial runs, and commence commercial production. Typical timeline: 12-18 months from land acquisition
7. Ongoing compliance: Maintain GST compliance, file annual returns with MCA, submit FLA returns, maintain transfer pricing documentation, and renew ALMM listing periodically

For comprehensive guidance on establishing a foreign subsidiary for manufacturing, see our foreign subsidiary registration service and FDI advisory service.

Key Takeaways

Workforce and Talent Considerations

Renewable energy manufacturing requires a mix of engineering talent, skilled technicians, and factory floor operators. India's engineering college system produces approximately 1.5 million engineering graduates annually, though quality varies significantly. For solar cell and module manufacturing, key skill requirements include semiconductor process engineering (for cell fabrication), electrical engineering (for module assembly and testing), and quality assurance with familiarity with IEC standards.

Wind turbine manufacturing demands mechanical engineering expertise for nacelle assembly, composite materials specialists for blade manufacturing, and electrical engineers for generator and power electronics production. India has a mature wind manufacturing workforce concentrated in Tamil Nadu, Gujarat, and Maharashtra, where companies like Suzlon and Vestas have operated for over a decade.

Labour Law Compliance

Manufacturing units must comply with India's consolidated Labour Codes — the Code on Wages 2019, Code on Social Security 2020, Industrial Relations Code 2020, and Occupational Safety Code 2020. Key obligations include minimum wage compliance (varies by state and skill category), EPF contributions at 12% of basic salary, ESI contributions for employees earning up to INR 21,000 per month, and gratuity liability after five years of continuous service.

For foreign manufacturers, the employer of record model can facilitate initial hiring before the manufacturing entity's HR infrastructure is fully established, though direct employment is the norm for factory operations.

Export Opportunities and Global Competitiveness

India's solar manufacturing scale-up is not solely about the domestic market. With India's module manufacturing capacity projected to reach 100+ GW by 2026, export markets — particularly the US (where anti-China tariffs create demand for alternative supply), Europe, and the Middle East — represent significant revenue opportunities for Indian manufacturers.

The government supports solar equipment exports through Duty Drawback schemes, RoDTEP (Remission of Duties and Taxes on Exported Products), and access to preferential tariff treatment under India's free trade agreements with ASEAN, Japan, South Korea, and the UAE. Manufacturers in SEZs benefit from zero customs duty on imported raw materials, further improving export competitiveness.

For wind equipment, India's existing export base — particularly wind turbine towers and blades — positions the country as a viable manufacturing hub for markets across South Asia, Africa, and Latin America where wind energy deployment is accelerating.

Key Takeaways

• 100% FDI is permitted under the automatic route for solar and wind manufacturing, with no prior government approval required. The sector has received USD 12.67 billion in cumulative FDI equity inflows
• The PLI scheme provides INR 24,000 crore in incentives across two tranches covering 48,337 MW of solar PV module capacity, with production incentives disbursed over five years post-commissioning
• ALMM listing is mandatory for market access — only ALMM-listed modules can be used in government projects, open access, and net-metering installations. The June 2026 cell sourcing mandate will further tighten domestic content requirements
• ALMM(Wind) mandates domestic component sourcing for blades, towers, gearboxes, generators, and bearings (65-70% of turbine cost), along with data localisation requirements effective July 2025
• Customs duties protect domestic solar manufacturing with 40% BCD on imported modules and 25% on cells, while manufacturing equipment imports are duty-free. Wind equipment faces lower protection due to India's existing domestic manufacturing base
• State-level incentives significantly improve project economics — Gujarat, Tamil Nadu, Rajasthan, Karnataka, and Andhra Pradesh offer capital subsidies, SGST refunds, and land at concessional rates for manufacturing units