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					</table>With the U.S. beginning to enforce the Foreign Entity of Concern (FEOC) rules and global buyers accelerating China+1 sourcing strategies, Indian solar module manufacturers are positioning themselves to capture new export opportunities and expand their international manufacturing footprint.
Manufacturers with transparent supply chains, robust quality systems, and FEOC-compliant sourcing strategies are expected to be the biggest beneficiaries.
Starting April 2026, U.S. companies <a href="https://www.mercomindia.com/us-tightens-tax-credit-rules-to-curb-chinas-clean-energy-role" target="_blank" rel="noopener">seeking</a> federal incentives such as production and investment tax credits for solar and battery storage projects must demonstrate that their supply chains do not receive material assistance from prohibited foreign entities. These include entities linked to China, Russia, Iran, and North Korea.
U.S. companies must also establish that such foreign entities do not exercise effective control over projects claiming the incentives.
The new rules come at a time when India’s module manufacturing is expanding faster than domestic demand, creating a strong incentive for manufacturers to diversify into export markets. If not immediately, Indian companies can also consider exporting solar cells to the U.S., although current manufacturing capacity hovers around 30 GW, which is inadequate to meet domestic demand. But several companies are setting up new production lines and have announced capacity expansions, and supply could outstrip demand in the second half of next year.
According to industry executives, the COVID-19 pandemic fundamentally changed how global buyers view supply chain risk.
Abhishek Kaushal, Chief Business Officer at <a href="https://insolationenergy.in/" target="_blank" rel="noopener">Insolation Energy</a>, said the pandemic exposed the risks of excessive dependence on a single country for global supply chains. Since then, several countries, including the U.S., have been working towards China+1 strategies.
Kaushal said the antidumping and countervailing duty investigations involving Indian solar products might have created short-term trade friction with the U.S. However, FEOC restrictions could ultimately encourage U.S. developers to diversify procurement away from China-linked supply chains while preserving access to federal tax credits.
Manufacturers believe the expanding FEOC compliance framework is reshaping global procurement strategies and creating a significant, but highly selective export opportunity for Indian suppliers.
Kalpesh Kalthia, Chairman and Managing Director at <a href="https://kosolenergie.com/" target="_blank" rel="noopener">Kosol Energie</a>, said the rules could create a sharp divide among manufacturers. Companies that continue to rely heavily on upstream components sourced from regions that are not compliant with FEOC regulations may face trade barriers and tariff exposure.
He added that manufacturers capable of providing complete and auditable supply chain traceability down to the raw-material level are likely to fare the best.
As a result, competitive advantage is likely to shift from manufacturing capacity alone to supply chain transparency and regulatory compliance.
Duari believes that companies seeking to supply the U.S. market in the near term must establish transparent sourcing systems, strengthen supply chain traceability, and work with suppliers to comply with applicable regulations.
During its fourth-quarter earnings call, <a href="https://www.waaree.com/" target="_blank" rel="noopener">Waaree Energies</a> noted that the FEOC rules can help non-Chinese supply chains gain traction in the U.S. The Maharashtra-based company said the regulations could encourage non-Chinese manufacturers to build capacity and establish robust supply chains serving the U.S. market. This could include manufacturing in India for direct exports or supplying components for further processing in the U.S.
Waaree noted that Europe, too, has expressed its intention to reduce its dependence on Chinese sourcing, which could place non-Chinese supply chains on a sustained growth trajectory.
Integrated Manufacturers Biggest Winners
The FEOC framework is also expected to reshape competitive dynamics within India&#8217;s manufacturing industry.
Tanmoy Duari, Chief Executive Officer at <a href="https://axitecsolar.com/en" target="_blank" rel="noopener">AXITEC Energy India</a>, said manufacturers with integrated cell and module production are likely to have an advantage because vertical integration provides greater control over supply chains, traceability, product quality, and regulatory compliance.
Pure-play module manufacturers could remain competitive if they have access to FEOC-compliant solar cell suppliers, he added.
However, not all manufacturers are sold on the sustainability of the vertical integration route. Kalthia believes that vertical integration could also become a compliance liability under strict FEOC rules.
He added that an integrated manufacturer could be excluded from the U.S. market if an upstream wafer or polysilicon supplier were flagged for non-compliance.
Kalthia said that manufacturers must be able to segregate non-FEOC cells and wafers for U.S.-bound projects while using alternative sourcing channels for domestic or less-restrictive export markets.
Production in the U.S.
The FEOC rules could also accelerate Indian investment in U.S.-based manufacturing and strategic partnerships.
Kaushal said the U.S. is seeking to reduce its dependence on direct imports while continuing to attract foreign manufacturing investment. Several international manufacturers are therefore moving their production chains closer to the U.S. market.
Manufacturers said the trend is also supported by policy incentives and broader efforts to strengthen local supply chains.
However, Duari noted that imports would likely continue to play an important role in meeting market requirements, particularly in the medium term, keeping global manufacturing hubs such as India relevant to the U.S. supply chain.
Manufacturers agreed that the U.S. module assembly capacity might be expanding, but the market cannot achieve complete import independence in the near term.
Industry insiders also feel that compliance with international guidelines like FEOC comes with their own challenges.
Kalthia said the U.S. has built substantial downstream module assembly capacity but continues to face bottlenecks in domestic cell and wafer production. Compliance would require a strategic combination of domestic and imported components.
Recognizing that future U.S. procurement strategies are likely to combine domestic and overseas manufacturing, Kosol Energie is also evaluating opportunities to establish a manufacturing presence in the U.S. The Gujarat-based company is also looking to enter into strategic partnerships with existing domestic manufacturers.
Indian manufacturers are already responding by investing further upstream. Waaree Energies, for example, has announced an investment of ₹39 billion (~$405.28 million) for a 2,500-ton-per-day photovoltaic glass manufacturing facility. The proposed capacity could support the production of approximately 16-17 GW of solar modules annually.
The company said that glass accounts for approximately 23% of module cost and 75% of module weight, which will significantly strengthen its cost competitiveness and supply chain independence. It has commenced construction of its 10-gigawatt ingot-wafer facility in Nagpur, with a CAPEX of ₹62 billion (~$642.48 million).
Export Volumes Difficult to Forecast
Despite the opportunity, manufacturers remain cautious about forecasting export volumes because U.S. trade and industrial policy continues to evolve rapidly.
According to data from the Department of Commerce, India <a href="https://www.mercomindia.com/indias-solar-imports-rise-14-qoq-in-q1-2026-exports-continue-to-decline" target="_blank" rel="noopener">exported</a> solar cells and modules worth over $77.7 million (~₹7.1 billion) in Q1 2026, a 70.9% YoY decline from $267.6 million (~₹23.2 billion).
The sharp decline also illustrates how policy uncertainty can influence export demand despite strong underlying market potential.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-101978 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1.png" alt="" width="982" height="627" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1.png 982w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1-300x192.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1-768x490.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1-650x415.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1-624x398.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/07/feoc1-600x383.png 600w" sizes="auto, (max-width: 982px) 100vw, 982px" /></a>
The U.S. accounted for 90.5% of India’s solar exports during the quarter, highlighting continued concentration risk in export demand. The UAE, China, and Thailand accounted for 4.6%, 2.4%, and 0.6% of exports.
Kosol Energie said it has secured contracts and has the capacity to support substantial export volumes. However, it is concerned about the potential impact of the broad tariffs under ongoing Section 232 investigations, which could result in additional duties or quotas on imported polysilicon and downstream solar components.
Despite these uncertainties, manufacturers expect compliant modules supplied to the U.S. market to command a premium over modules sold domestically.
Kaushal said U.S. exports have historically generated profit margins 40% to 60% higher than domestic sales, although the gap has narrowed over time.
Manufacturers noted that the attractiveness of the U.S. market extends well beyond pricing premiums. Long-term policy certainty, access to global customers, foreign-exchange diversification, and stronger acceptance by international financial institutions are also important considerations.
Meanwhile, compliance costs, certification standards, logistics, supply chain traceability, and market-specific regulatory obligations are among the factors that shape U.S. export pricing, according to Duari.
Strengthening Sourcing Strategies
Indian manufacturers now face the dual challenge of meeting rising domestic demand under the Approved List of Models and Manufacturers List-II mandate while positioning themselves for higher-value export opportunities under the evolving FEOC framework.
Kaushal said manufacturers could pursue four broad sourcing strategies for high-value U.S. orders: reserving captive cell production for exports, sourcing non-FEOC cells from compliant countries, accelerating backward integration, and deploying blockchain-based or molecular traceability systems.
Industry executives said manufacturers are already working to expand domestic cell production through private investment and government-supported manufacturing programs. Many believe these investments will not only support exports but also strengthen India&#8217;s long-term manufacturing competitiveness.
Unlike previous trade measures, FEOC is not simply a tariff or import restriction. Instead, it shifts competition toward supply chain transparency and traceability. Manufacturers that can demonstrate compliance across the entire value chain, from polysilicon and wafers to cells and modules, are likely to gain a competitive advantage, while those relying on opaque or non-compliant sourcing may find access to the U.S. market increasingly difficult.

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