How to Start a Solar Product Manufacturing Business in India

Why Solar Product Manufacturing is a Smart Business Idea Today?

Solar product manufacturing business in India is emerging as a smart opportunity due to rising energy needs, increasing climate change awareness, and strong government support for renewable energy. Solar power has become more than a buzzword – it’s a billion-dollar industry in India. Solar product manufacturing, especially for items like solar panels, solar lanterns, solar pumps, and solar street lights, offers a solid business opportunity.

This industry is ideal for micro, small, and medium enterprises (MSMEs), aspiring green entrepreneurs, and those looking to enter the manufacturing sector with a sustainable, future-proof idea. Whether you want to serve rural electrification needs, urban rooftop markets, or export solar components, there’s a viable niche for everyone. If you are considering starting a solar product manufacturing business in India, now is the perfect time to enter this fast-growing industry.

Industry Overview & Key Products/Processes

What Is Solar Product Manufacturing?

Solar manufacturing refers to the industrial process of making solar-based products that convert sunlight into usable electrical or thermal energy. These products typically include:

• Solar Photovoltaic (PV) Panels – Convert sunlight directly into electricity using semiconductor materials.
• Solar Inverters – Transform the DC power from solar panels into AC power for home or commercial use.
• Solar Charge Controllers – Regulate voltage and current to prevent battery overcharging in solar setups.
• Solar Street Lights – Self-powered outdoor lights that store solar energy during the day for nighttime use.
• Solar Home Lighting Systems – Compact solar kits that provide essential lighting for rural or off-grid homes.
• Solar Water Pumps – Use solar power to lift or circulate water for irrigation, livestock, or household use.
• Solar Cookers – Utilize reflective surfaces and solar heat to cook food without gas or electricity.
• Battery Storage Units (specific to solar systems) – Store excess solar energy for use during non-sunny hours or power outages.

Key Manufacturing Processes

1. Photovoltaic Module Assembly – Involves soldering solar cells, encapsulation, lamination, framing, and testing.
2. Electronics Assembly – For products like inverters, controllers, and lighting systems.
3. Battery Integration – Required for off-grid solar products.
4. Quality Testing and Calibration – Ensures product performance under Indian environmental conditions.

Value Chain Overview: From Raw Materials to Market

The solar product manufacturing process is made up of several important stages that ensure the product moves from raw materials to a fully functional unit in the hands of the customer. Here’s how the value chain typically works:

1. Raw Material Procurement
   This is the first step where essential components like solar cells, toughened glass, aluminum frames, lithium/lead-acid batteries, and electronic parts such as PCBs, connectors, and controllers are sourced. While large manufacturers may produce some of these in-house, most small and medium businesses purchase these parts from local or international suppliers.
2. Manufacturing and Assembly
   After sourcing the parts, manufacturers assemble the components to build complete solar products—like panels, street lights, or solar water pumps. In India, many MSMEs focus on assembling products rather than building solar cells or modules from scratch, as those require high-end machinery and heavy investment.
3. Testing and Quality Control
   Every product goes through quality testing to ensure it meets industry and government standards. This step is crucial to maintain performance and safety, especially for products that will be used in remote or critical applications.
4. Distribution
   Once products are approved, they are distributed to dealers, government agencies, solar EPC (Engineering, Procurement, and Construction) contractors, or directly to consumers. Many businesses rely on state-level solar tenders or bulk orders from rural development schemes.
5. After-Sales Support
   This includes installation assistance, warranty support, repairs, and customer service. A strong after-sales network builds trust and encourages adoption, especially in rural or semi-urban areas where technical support is limited.

Why MSMEs Focus on Assembly

In India, many MSMEs do not manufacture solar cells or high-efficiency panels because doing so requires precision equipment, clean room facilities, and advanced R&D—all of which demand substantial capital and technical know-how. Instead, most MSMEs import solar cells or modules and focus on assembling final products, allowing them to enter the solar market with lower investment and faster setup time.

This model works especially well for startups and local entrepreneurs who want to tap into India’s booming solar market without the heavy cost of setting up a full-scale manufacturing plant. This makes solar product manufacturing business in India an attractive choice for MSMEs, startups, and entrepreneurs looking for sustainable growth.

Current Market Demand & Trends in India

Market Demand in India

India’s solar energy capacity crossed 70 GW in 2023, with a goal of reaching 280 GW by 2030 under the Ministry of New and Renewable Energy (MNRE). As per the India Brand Equity Foundation (IBEF), India is one of the top three solar markets globally.

The key factors driving demand include:

• PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan): Subsidizes solar-powered irrigation systems like pumps and mini solar plants for farmers, creating strong demand for solar pumps, inverters, and panels.
• Saubhagya Yojana (Pradhan Mantri Sahaj Bijli Har Ghar Yojana): Focused on providing electricity access to all households, especially in remote regions, by encouraging the use of decentralized solar kits and home lighting systems.
• Massive Rural Electrification Efforts: Government-led initiatives aim to expand electricity access in villages using solar mini-grids and standalone solar systems, boosting demand for solar home kits, controllers, and micro inverters.
• Solar Rooftops for Homes and Industries: Subsidized rooftop solar programs with net metering benefits are increasing adoption in residential and industrial sectors, supporting solar panel, inverter, and battery manufacturers.
• Smart Cities and Urban Infrastructure: Urban development under the Smart Cities Mission includes solar-powered street lights, solar rooftops on public buildings, and solar-integrated transport hubs—driving demand for advanced solar products and integrated energy solutions.

Regional Hotspots

India’s solar energy landscape is evolving quickly, but not all regions are growing at the same pace. Some states and zones have emerged as strong hubs for solar adoption due to a combination of favorable policies, sunlight availability, and demand for decentralized energy. Here’s how different regions are shaping the solar market:

1. Rajasthan, Gujarat, and Tamil Nadu – Leaders in Solar Installations
These three states are the front-runners when it comes to grid-connected solar power capacity. Their success is driven by high solar irradiance (sunlight levels), proactive state policies, vast land availability, and strong infrastructure.

• Rajasthan currently has the highest installed solar capacity in India, thanks to its desert terrain and strong government support.
• Gujarat was an early mover in solar adoption and continues to lead in rooftop solar penetration.
• Tamil Nadu complements its wind energy strength with aggressive solar park development and industrial demand.

These states not only have large utility-scale solar parks but also attract solar manufacturers, EPC contractors, and raw material suppliers.

2. Northeast and Central India – Emerging Off-Grid Markets
In regions like Assam, Meghalaya, Chhattisgarh, and parts of Jharkhand and Madhya Pradesh, access to consistent electricity is still a challenge in many rural and tribal areas. This has created strong demand for off-grid solar solutions, including:

• Solar home lighting systems
• Solar lanterns
• Solar-powered irrigation pumps

Government schemes like Saubhagya and PM-KUSUM have made solar a practical choice for these underserved regions. As a result, entrepreneurs in these areas have a growing market for low-cost, durable solar products.

3. Tier 2 & Tier 3 Cities – Rising Interest in Decentralized Products
Cities like Nashik, Bhopal, Coimbatore, Lucknow, and Bhubaneswar are witnessing increased demand for household and small-scale solar products.
Key drivers include:

• Rising electricity bills
• Intermittent grid supply in peri-urban areas
• Increasing awareness about renewable energy
  Popular products in these markets include:
• Solar water heaters for residential use
• Solar street lights for community lighting
• Rooftop solar kits for small offices and homes

For MSMEs and new solar entrepreneurs, these cities offer cost-effective markets to enter without facing intense competition from large players.

India’s solar opportunity is not limited to big cities or large projects. From rural Northeast to growing Tier 2 cities, the demand for solar solutions is spreading widely – offering multiple entry points for businesses across the country.

Common Applications & End-Use Sectors

Solar products serve a wide range of sectors in India, each with distinct energy needs and practical use cases. From agriculture to healthcare, the push toward clean energy is creating demand across multiple industries and consumer segments. Here’s how different sectors use solar products:

Agriculture

Solar energy plays a critical role in rural India, especially in farming communities that lack consistent grid power.

• Solar water pumps are used to draw groundwater for irrigation, replacing diesel-based pumps and cutting operating costs.
• Solar-powered drip irrigation systems support efficient water usage, ideal for small and marginal farmers.

Residential

With rising electricity bills and frequent power cuts in many regions, homeowners are increasingly adopting solar solutions.

• Rooftop solar panels provide backup power and help reduce dependency on the grid.
• Home lighting kits and solar inverters offer clean, off-grid alternatives for basic household electricity needs.

Commercial and Industrial (C&I)

Businesses and industries are turning to solar to cut energy costs and meet sustainability goals.

• High-capacity solar panels and UPS systems power machinery, lighting, and IT equipment in factories and warehouses.
• Solar energy is especially useful in sectors with high daytime energy usage, such as cold storage, textile, and retail.

Government Projects

Solar is a major part of public infrastructure projects, especially in rural development and urban beautification.

• Solar streetlights are widely used in villages, towns, and smart cities.
• Government-run schools, anganwadis, and electrification projects in unelectrified villages often rely on solar power for lighting and basic appliances.

Healthcare

In rural health centers and mobile clinics, where grid supply is unreliable, solar helps power critical services.

• Solar-powered refrigerators keep vaccines safe.
• Solar lighting supports basic operations in Primary Health Centres (PHCs), especially during emergencies and nighttime services.

Hospitality Sector

Eco-tourism resorts, lodges, and even urban hotels are integrating solar to reduce energy costs and meet green certification standards.

• Solar water heaters and cookers are commonly used in kitchens and guest facilities, especially in off-grid or semi-urban locations.

Education

Schools, especially in remote areas, face frequent power shortages.

• Solar systems provide reliable electricity for lighting, fans, and digital learning devices.
• Backup power from solar helps ensure that education is not disrupted due to outages.

These varied applications make solar product manufacturing a versatile and high-demand business opportunity. Entrepreneurs can target one or more of these sectors depending on their location, investment, and business model.

Business Setup Insights

Machinery and Equipment Required

Depending on the product line, you will need:

• Module Assembly Line: Solar tabber stringer, laminator, framing machine, sun simulator
• Electronic Assembly Tools: Soldering stations, multimeters, PCB printing tools
• Battery Storage and Integration Setup
• Solar Testing Equipment: IV tester, thermal testers
• Packaging and Labeling Machines

Raw Materials

• Solar PV Cells (mono/polycrystalline)
• Aluminum frames
• EVA Sheets, TPT Back Sheets
• Tempered Glass
• Bypass Diodes and Junction Boxes
• Electronic Components (for inverters, lights)
• Batteries (Li-ion, Lead Acid, Gel)

Investment Range

• Small-scale setup (assembly only): ₹15–30 lakhs ($18,000–$36,000)
• Medium-scale setup (battery integration and multiple product lines): ₹50 lakhs–₹2 crores ($60,000–$240,000)
• Full-scale solar module manufacturing (including cell manufacturing): ₹10–50 crores ($1.2–6 million), generally not ideal for MSMEs

Ideal Location

• Industrial parks with power backup and logistics access
• Proximity to SEZs or solar parks for export benefits
• States with solar policies like Gujarat, Maharashtra, and Rajasthan

Licensing and Approvals

• Udyam Registration (MSME)
• GST Registration
• Pollution NOC (if required for battery units)
• BIS Certification for PV modules
• MNRE empanelment for public projects
• IEC Testing and IP Certification

Export Opportunities

India’s solar manufacturing sector is not only meeting local demand but also making significant strides in global markets. With growing recognition for quality and affordability, Indian-made solar products are being exported to several emerging regions, especially where energy access is still limited or costly.

• Africa – Off-grid solar kits and pumps : Many African countries face challenges with grid connectivity, especially in rural regions. Indian exporters are tapping into this gap by supplying off-grid solar kits, home lighting systems, and solar-powered water pumps. These products are affordable, easy to maintain, and ideal for agriculture and household use in remote areas.
• Middle East – Industrial-grade solar panels : With increasing investment in solar parks and energy diversification, Middle Eastern countries are importing high-capacity solar panels and inverters. Indian manufacturers offer a cost-effective alternative to European and Chinese suppliers, making them competitive in this market.
• Southeast Asia – Solar lights and inverter systems : Countries like Indonesia, Vietnam, and the Philippines are actively deploying solar lighting, inverter-based backup systems, and rooftop solar kits, particularly in island and off-grid regions. Indian products are gaining popularity due to their adaptability to tropical conditions and robust performance.

As per UN COMTRADE data, India’s solar exports grew by 23% year-on-year (YOY) in 2022, with major gains in off-grid systems, solar batteries, and low-cost lighting solutions. This reflects a clear demand trajectory, making solar manufacturing a promising export-oriented business for Indian MSMEs.

Government Support for MSMEs

India’s solar manufacturing sector is receiving significant policy and financial support from both the central and state governments. These schemes are especially beneficial for MSMEs and first-time entrepreneurs looking to enter the industry.

Central Government Schemes:

• PLI Scheme for Solar PV Modules
  The Production Linked Incentive (PLI) Scheme aims to boost domestic manufacturing of high-efficiency solar PV modules. Eligible manufacturers receive financial incentives based on the efficiency and capacity of their products. This scheme is crucial for those planning to enter upstream manufacturing of solar cells and modules.
• Capital Subsidies under PM-KUSUM
  The PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan) scheme provides capital subsidies of up to 60% for setting up solar pumps and grid-connected solar plants for farmers. Manufacturers and integrators supplying to these projects see stable demand from state nodal agencies.
• Startup India and Stand-Up India Schemes
  These flagship programs offer financial support, tax exemptions, mentorship, and fast-track patent processing for new and innovative solar startups. MSMEs and SC/ST/women-led enterprises can access collateral-free loans and working capital assistance.
• Interest Subvention from SIDBI and NABARD
  SIDBI (Small Industries Development Bank of India) and NABARD offer interest subvention (reduction) on loans for clean energy and solar businesses. This helps reduce borrowing costs for MSMEs investing in machinery, R&D, or scaling operations.

State-Level Support:

• NEEDS Scheme (Tamil Nadu)
  Under the New Entrepreneur-cum-Enterprise Development Scheme, eligible solar entrepreneurs in Tamil Nadu can get subsidized loans, capital subsidy up to 25%, and training support for business development.
• MSME Policy (Uttar Pradesh)
  Uttar Pradesh’s MSME policy includes provisions for land rebates, power tariff subsidies, and capital investment assistance for solar product manufacturers setting up units in industrial clusters.
• Similar State-Level Programs
  Other states like Gujarat, Rajasthan, and Maharashtra also offer solar-specific subsidies, interest-free loans, and SGST refunds under their renewable energy and MSME promotion policies.

Export Support Schemes:

• MEIS (Merchandise Export Incentive Scheme)
  Although being phased out and replaced by RoDTEP, MEIS offers financial rewards to exporters based on their FOB value of exports. Solar exporters can benefit from reduced overall export costs.
• Duty Drawback Scheme
  This scheme allows exporters to claim refunds on duties paid for imported raw materials or inputs, helping improve competitiveness in international markets.
• Assistance from IREDA (Indian Renewable Energy Development Agency)
  IREDA offers project financing, venture capital support, and bridge loans to solar energy enterprises. MSMEs manufacturing for large solar projects can access tailored loan products at concessional rates.

These schemes create a supportive ecosystem for MSMEs to enter and scale in the solar manufacturing domain. Whether you’re producing solar pumps, panels, or storage solutions, the combination of capital subsidies, low-interest loans, and export incentives makes this sector highly attractive.

Challenges and Practical Tips for Entrepreneurs

Common Challenges

• High initial investment for full module manufacturing
• Limited availability of indigenous solar cells
• Intense price competition from Chinese imports
• Technical skill gaps in electronics and PV assembly
• Delay in subsidy disbursements

Practical Tips

• Start with assembling kits like solar lanterns and street lights before expanding into full module manufacturing
• Focus on after-sales service—especially in rural or remote markets
• Build partnerships with NGOs, micro-finance institutions, and SHGs for distribution
• Participate in GeM (Government e-Marketplace) to win government tenders
• Train your team regularly on MNRE guidelines and quality standards

Future Potential of the Solar Product Manufacturing Industry in India

The next 10 years look promising for solar manufacturing in India. Several drivers are creating a favorable ecosystem:

• India’s goal of net-zero emissions by 2070
• Rising rooftop solar installations in urban homes
• Massive need for off-grid solutions in rural India
• Growth in energy storage and hybrid solar systems
• Electric mobility and EV charging powered by solar grids

Also, innovation is happening rapidly:

• Flexible solar panels for mobility and clothing
• BIPV (Building-Integrated Photovoltaics) systems
• Solar-powered cold chains and irrigation automation

As India becomes more self-reliant in energy, manufacturers who specialize in niche products—like smart solar kits, IoT-integrated solar inverters, or durable pumps—will have long-term competitive advantage.

Conclusion: Why Now Is the Right Time to Enter the Solar Manufacturing Business

If you’re looking to build a business that is future-ready, socially impactful, and government-supported, solar product manufacturing in India is a smart and timely choice. The demand is real, the government is backing the sector with schemes and incentives, and local and global markets are wide open.

Whether you want to serve farmers with solar water pumps, power homes with rooftop panels, or light up remote villages with solar lanterns, the opportunities are immense. For MSMEs, rural entrepreneurs, or even engineers looking to shift to business, this is a sector where growth and impact go hand-in-hand.

Get started small, build with the right partners, focus on quality and service, and scale as the market grows. Solar isn’t just a business opportunity – it’s a chance to be part of India’s clean energy revolution.

References

• https://mnre.gov.in – Ministry of New and Renewable Energy
• https://www.ibef.org/industry/renewable-energy
• https://www.nreda.org.in – State Renewable Energy Agencies
• https://www.gem.gov.in – Government e-Marketplace
• https://www.solarquarter.com
• https://www.ireda.in

FAQs About Solar Product Manufacturing in India