Among the world’s largest solar manufacturers, First Solar stands unique as the only US-headquartered player. Not only that, the other unique factor is that the company is decoupled from the China supply chain, unlike other domestic module makers. That is because of its cadmium-telluride photo volatic modules, which are fielded as an alternative to conventional crystalline silicon PV modules that depend on China. The company’s solar panel making process is different. It deposits tellurium-based semiconductor on a sheet of glass at a very high temperature and then through lasers, the stack is cut and cells are created. The cells are ultimately converted into a module. “It gives us degrees of freedom to operate in the very complex geopolitical environment which we see today with monopolisation of the supply chain leading to weaponisation of the supply chain,” says Sujoy Ghosh, Country Managing Director.
Own supply chain ecosystem
India’s clean energy transition has accelerated over the last 10 years and the share of non-fossil fuel capacity has reached over 54 per cent of the total electricity generation capacity of around 552 gigawatts (GW). Solar energy has been one of the key drivers of the country’s green energy story, with capacity increasing to around 165 GW now from 2.8 GW in 2014. Through the Production Linked Incentive (PLI) scheme and Approved List of Models and Manufacturers (ALMM) for solar modules there is a push towards reducing supply chain dependence on China and developing domestic manufacturing capabilities. The country’s solar module manufacturing capacity has increased to about 172 gigawatts (GW) as of 31 March 2026 from 2.3 GW in 2014. The PLI scheme for high efficiency solar PV modules has attracted investments of around Rs 35,000 crore, according to government data.
India pivot…
The Nasdaq listed First Solar’s decision to set up manufacturing in India has mirrored the country’s push towards green energy. First Solar set up its sales office in New Delhi in 2012, when the Indian government announced the Jawaharlal Nehru National Solar Mission. It started supporting companies developing projects under the scheme and supplied its panels that were manufactured in the US or in Malaysia. In 2014, the Prime Minister Narendra Modi led government announced the scaling up of the solar programme. Driven by this, First Solar’s global leadership decided to build solar assets in India. Once the assets are developed, the company sold it to financial investors, recovered its investments and redeployed the capital to build more assets.
Between 2015 and 2019, the company built 10 projects in the states of Andhra Pradesh, Telangana and Karnataka. Slowly, the pace accelerated and investors became comfortable with the risk profile. The Indian government’s solar park policy helped developers come and deploy capacities. First Solar felt that in such an environment there was no differentiation and it should remain a technology company and not an energy company. So, it divested its assets in India, the US, Australia and Japan. Post 2017, India also moved from a feed-in-tariff and subsidy-based solar regime to a discovered tariff regime where the cost was at par or lower than the marginal cost of coal.
In 2020, the company decided to look at setting up a manufacturing base in India, as the market was expanding rapidly and solar was considered a mainstream energy source. The decision was driven by many policy measures, including the push towards domestic manufacturing. The Indian government started with a fiscal policy, which reduced the corporate tax on new manufacturing investments to 15 per cent from 24.5 per cent. The aggregate tax for new manufacturing came down to about 17.5 per cent from about 25.7 per cent. The centre also announced the Approved List of Models and Manufacturers (ALMM), which stated that solar panels connected to the grid would necessarily need to be made in India. “We had very clear signals from the policy front that India wants to domesticate its solar value chain. Import reduction was the other underlying objective,” highlights Ghosh.
In 2021, First Solar announced that it will set up a manufacturing facility in Tamil Nadu with an investment of nearly Rs 6000 crore and an annual capacity of 3.3 GW. This was one of the biggest foreign direct investments in the solar sector. The factory went on stream in June 2023. Other than India, First Solar has facilities in the US, Malaysia and Vietnam, which takes its total capacity to 25 GW.
Tamil Nadu attracts solar
First Solar’s Tamil Nadu plant became operational in about 19 months. “We completed the facility in record time. India came up much faster than even Vietnam. This highlights the ease of doing business,” stresses Ghosh. The state offered good quality power which is important for semiconductor manufacturing. “In a lot of other states in India availability of industrial water is a challenge because we have a high base line water stress. Here our facility has tertiary treated RO water facility,” points out Ghosh.
First Solar chose the location near Chennai because of its proximity to port. “Access to port, good quality, reliable power and water and quality talent combine uniquely in the state of Tamil Nadu,” points out Ghosh. That explains why many players have picked Tamil Nadu for setting up solar module manufacturing.
Last month, Tamil Nadu Chief Minister Joseph Vijay virtually inaugurated Virkam Solar’s 6 GW Solar PV Module manufacturing plant at Gangaikondan, Tirunelveli. The company said the Gangaikondan campus is planned to progressively expand beyond module manufacturing to include solar cell, wafer and ingot manufacturing, bringing key stages of the solar value chain together at a single location. Last year, the company commissioned its 5 GW Vallam manufacturing facility in Tamil Nadu. It also has a 1.3 GW plant in Oragadam.
TP Solar Ltd, one of India’s largest cell and module manufacturing companies and a subsidiary of Tata Power Renewable Energy Ltd. (TPREL), has a total cell and module manufacturing capacity of 4.3 GW in Tirunelveli. The company has committed nearly Rs 4300 crore for the facility.
Genz workforce
First Solar factory is highly automated and provides direct employment to 1000 people. 40 per cent of the workforce is women. The gender mix in the India factory is higher than First Solar’s other locations. “The average age of the workforce is just 23 years. These Gen Zs are very comfortable in quickly learning the high level of automation,” highlights Ghosh. First Solar hires right from entry-level diploma engineers to PhDs, undergraduates and postgraduates. Thanks to the state’s strong technical education strength, the company hires diploma engineers and graduates from the state. “I think there are a lot of opportunities for the youth in the state in high-tech industries,” adds Ghosh.
Endless Opportunities
Since covid, the Indian government has been looking at achieving self-reliance (Atmanirbhar Bharat) by decoupling its supply chain from overdependence on China. The move to create its own supply chain is not just for domestic consumption, but also for potential export opportunities. Amid the current tariff tensions and geopolitics, every country is pushing towards local manufacturing. “We sit right at a sweet spot where we can manufacture everything without depending on the China supply chain,” points out Ghosh.
In 2019, the centre launched the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM) to promote the solarisation of agriculture. Two years ago, it launched the flagship rooftop solar scheme, PM Surya Ghar – Muft Bijli Yojana, targeting the residential market. Both programmes place a strong emphasis on domestic value addition, with solar cells required to be manufactured in India.
First Solar, however, has so far chosen not to participate in the residential market. “We have done solarisation of agriculture very successfully in the last 18 months and we continue to do so,” says Ghosh. The company has achieved more than 60 per cent localisation, although it continues to import some glass and components from Vietnam. As India’s solar manufacturing ecosystem matures, First Solar is steadily localising more of its bill of materials. “Things like the frame of our module, or the connectors, or the junction box, one part of the glass, or the packaging, everything is local now,” points out Ghosh.
First Solar has been allotted Rs 1170 crore under the centre’s PLI scheme. The company can claim the incentive once it meets the prescribed performance targets. So far, it has not drawn any amount and has five years to do so. “Domestically manufactured solar cells are expected to meet nearly half of India’s total demand this fiscal, up from about a quarter last fiscal. Most solar modules used in India are already manufactured locally,” says Ankit Hakhu, Director, Crisil Ratings. Solar adoption is rising across utility-scale, commercial and industrial (C&I) and rooftop segments. Exports have also supported Indian manufacturers. They have benefited from demand from the United States (US), helped by the country’s efforts to diversify solar supply chains away from China. Recently imposed countervailing duties and anti-dumping duties may moderate exports to the US. “However, rising solar deployment in Europe, the Middle East, Africa and Australia should create other export opportunities and partly offset the impact,” points out Hakhu.
Gap between commissioning and transmission
The key challenge the company has to cope with is the volatile demand, given that manufacturing is a continuous process. “Our customers buy the modules and contract with us, but they are not sure when they need the modules at site. Because it is an infrastructure project, they face issues related to land and grid connectivity, which delays shipments of our panels,” highlights Ghosh. Matching steady state production with fluctuating demand is perhaps more of a business challenge. According to India Ratings, the growing gap between renewable energy commissioning and transmission readiness is emerging as a key credit risk. While around 112GW out of the planned 196GW renewable energy pipeline till FY32 remains aligned with transmission schedules, about 84GW of capacity faces delays, highlighting a persistent transmission execution gap.
Another challenge is that energy is a policy dependent and regulated topic. One of the examples is ALMM scheme 2 is being enforced from 1 June 2026, but an extension was given for 5 months for the commercial industrial sector. “This is where people developing projects get very mixed signals in terms of whom to buy the modules from. Should they buy local content or buy from those who are importing,” points out Ghosh.
Domestic solar module manufacturers face structural and execution-related challenges. Rapid capacity addition has raised the risk of oversupply and lower utilisation, especially if domestic demand or exports do not grow as expected, Hakhu adds. Technology change is another key risk. Solar manufacturing is moving quickly towards higher-efficiency cell technologies such as tunnel oxide passivated contact (TOPCon), heterojunction (HJT) and other next-generation formats. Manufacturers will need regular investments to remain competitive.
Another issue relates to delays in signing power purchase agreements (PPA), financial closure and development of transmission evacuation infrastructure. “As of the end of last fiscal, nearly half of the previously awarded renewable energy tenders were awaiting PPA signing and financial closure. Transmission networks in key renewable energy hubs such as Rajasthan and Gujarat also continue to face evacuation constraints and curtailments,” highlights Hakhu. Such aspects can slow tendering and project execution and affect demand.
Next Phase of Solar Growth
India is expected to be a 45-50 GW per annum market in the next two to three years. The centre is also looking to incentivise domestic manufacturing of solar PV ingots and wafers by 2028 under the ALMM-III framework. “There is a policy transition happening where the government is increasingly ramping up its local content of the solar value chain. We will wait to see how these play out,” says Ghosh. India’s solar market is at an interesting inflection point. With many modules and components still imported, excess capacity has led to dumping and pricing that does not always reflect the true cost of doing business in India. Greater localisation of cells, ingots, wafers and potentially polysilicon could create a more level playing field for domestic manufacturers.
Another key shift is towards distributed renewable energy. While large-scale solar and wind projects dominated between 2010 and 2022, schemes such as PM-KUSUM and PM Surya Ghar are driving faster deployment of smaller systems. Industries are also emerging as important buyers of renewable power. Manufacturing and agriculture account for about a quarter and a fifth of India’s electricity demand respectively. With energy demand expected to rise sharply, India’s ability to build a self-reliant supply chain will be critical. For First Solar, continued investment and technological advancement will determine its success.