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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.
Tanmoy Duari, Chief Executive Officer at <a href="https://axitecsolar.com/en" target="_blank" rel="noopener">AXITEC Energy India </a>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.
Duari 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.

Could US FEOC Rules Create New Export Opportunities for Indian Solar Manufacturers?

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					</table>The rush to comply with the Approved List of Models and Manufacturers (ALMM) guidelines for solar modules and cells has sparked concerns among industry stakeholders about a potential mismatch between demand and supply and delayed project timelines.
While module manufacturers are gearing up to increase production and meet demand, Kayan Kalthia, Director at <a href="https://kosolenergie.com/" target="_blank" rel="noopener">Kosol Energie</a>, feels the sector might face cell supply constraints for another six to seven months before new domestic capacity stabilizes the market.
In an interview on the sidelines of the <a href="https://www.mercomindia.com/event/mercom-india-renewables-summit-2026" target="_blank" rel="noopener">Mercom India Renewables Summit 2026</a>, held in New Delhi on July 1 and 2, Kalthia talks about India&#8217;s solar manufacturing ecosystem, export opportunities, timelines for the Approved List of Models and Manufacturers (ALMM), battery energy storage, and Kosol&#8217;s plans to foray into battery cell manufacturing.
<iframe loading="lazy" title="Interview with Kayan kalthiya" src="https://player.vimeo.com/video/1210412861?h=56ad886592&amp;badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479" width="100%" height="500" frameborder="0">﻿﻿﻿</iframe>
The following are edited excerpts from the interview.
Given the wide gap between ALMM-listed module capacity and cell capacity, how much domestic cell capacity is currently available to independent module manufacturers?
Cell manufacturers are making every effort to increase supplies, but the number of module manufacturers far exceeds the available domestic cell capacity. Currently, only about 20% to 25% of India&#8217;s domestic cell production is available to independent module manufacturers, well below what the market requires.
The industry had anticipated this shortage and is prepared to deal with it. I expect the next six to seven months to remain challenging, but additional cell manufacturing capacity should come online and stabilize the market after that period.
Kosol has been in the industry since 2012, and our long-standing relationships with cell manufacturers have helped us secure supplies.
With more than 250 GW of module manufacturing capacity announced or under construction, where can this additional capacity be sold?
Selling that additional capacity will be difficult, regardless of the market. Europe continues to be largely dominated by Chinese manufacturers. In markets where non-Chinese sourcing requirements are emerging, there are more economical Southeast Asian suppliers than Indian manufacturers.
The industry needs to take a hard look at where it is allocating capital. It also needs to consider new ways of deploying this power. Data center capacity is expanding rapidly, and if grid connectivity becomes a constraint for these facilities, off-grid power systems could create another avenue for deploying additional module manufacturing capacity.
The U.S. was previously a significant market for Indian exporters. Do you see any other export markets emerging for Indian modules?
Even when India exported significant volumes to the U.S., exports were concentrated among a relatively small number of manufacturers. Most of those select exporters now have their own cell manufacturing capacity.
Alternative markets exist, but Indian manufacturers will continue to face strong competition from Chinese suppliers. The more indigenized Indian manufacturing becomes, the more competitive it can be internationally.
However, selling modules compliant with domestic content requirements in India is currently more viable than exporting them. Kosol continues to export because of its technological capabilities and advances in module technology, which help us maintain a competitive edge. I am unsure about how many recently established module manufacturers have approached the market with the same focus.
The industry faced bottlenecks when the ALMM lists I and II were introduced, and there is now a timeline for ingot and wafer manufacturing. Should the government reconsider these timelines?
I do not think the timelines should be reconsidered. By maintaining the deadlines, the government has demonstrated that it will not continue moving the goalposts. That provides investors with greater confidence and makes it easier to raise capital for further vertical integration.
Many cell manufacturing projects have been announced, and India may have to face an overcapacity phase. However, I believe that it could be beneficial for the sector because it may open export markets for Indian manufacturers.
An ingot and wafer manufacturing facility takes around two years to establish. Since the government is maintaining the implementation timeline, investors are more confident and willing to commit capital to these projects.
Which segments are most likely to drive energy storage demand: commercial and industrial (C&amp;I), residential, or public utility projects?
Public utility projects will see the largest growth because their business case and project parameters are easier to define and evaluate.
However, the C&amp;I segment could offer higher internal rates of return. India is moving toward time-of-day tariffs, with different tariffs during solar and non-solar hours. The wider that difference becomes, the more viable battery energy storage systems will be for commercial, industrial, and residential consumers.
In some developed markets, the tariff difference can be as high as six times. At that level, battery storage becomes highly attractive and almost mandatory.
India still depends heavily on China for battery cells. How do you see the battery value chain becoming more indigenous? What are the main bottlenecks?
I expect domestic battery cell manufacturing to develop quickly. The solar manufacturing experience has demonstrated that the Indian government supports indigenous manufacturing.
Kosol is actively moving toward battery cell manufacturing because we expect the government to continue supporting domestic production. Based on our experience in solar manufacturing, we also expect to have excess capacity that can serve other battery assembly companies entering the market.

Solar Module Manufacturers May Face Cell Supply Shortage for 6-7 Months: Interview

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					</table>As India’s battery energy storage gains wider adoption, the focus has now shifted to project viability and long-term project execution.
Battery storage projects are highly sensitive to technical and commercial assumptions, including degradation rates, round-trip efficiency, dispatch strategy, cycling frequency, and revenue-stacking potential, all of which can affect the project&#8217;s bankability.
While storage has become an integral component of India’s clean energy initiative, there are still serious questions about the economic viability of these projects due to aggressive bidding.
According to Mercom India Research’s Levelized Cost of Storage and Bidding Trends in Indian Energy Storage Projects report, only 50% of standalone battery energy storage projects <a href="https://www.mercomindia.com/is-aggressive-bidding-distorting-the-economics-of-energy-storage-projects-in-india" target="_blank" rel="noopener">showed</a> positive project economics under modeled assumptions.
At Mercom India’s <a href="https://www.mercomindia.com/event/mercom-india-renewables-summit-2026" target="_blank" rel="noopener">Renewable Energy Summit</a>, scheduled for July 1-2, 2026, at the Hyatt Regency in New Delhi, industry stakeholders will discuss these challenges in an exclusive panel discussion titled “Structuring Battery Storage for Scalable Deployment.” To be held on July 1, the session will examine how realistic performance data, robust financial modeling, and revenue visibility across ancillary services, peak shifting, and capacity mechanisms influence project bankability and investor confidence.
The panel will feature Sarit Maheshwari, CEO at <a href="https://ngel.in/" target="_blank" rel="noopener">NTPC Green Energy</a>; Kayan Kalthia, Director at <a href="https://kosolenergie.com/" target="_blank" rel="noopener">Kosol Energie</a>; Krishan Dutt Tiwari, Chief Projects Officer (BESS) at <a href="https://www.adanigreenenergy.com/" target="_blank" rel="noopener">Adani Green Energy</a>, and Purnendu Chaubey, Senior VP, Strategic Business Development and Policy Advocacy, at <a href="https://www.renew.com/" target="_blank" rel="noopener">ReNew</a>.
The panelists will discuss contract structures, risk allocation, financing strategies, and execution challenges, while exploring how battery storage projects can be structured and delivered at scale.
The 2026 Summit will also feature The <a href="https://www.mercomindia.com/awards/mercom-india-awards-2026" target="_blank" rel="noopener">Mercom India Awards,</a> which will honor outstanding achievements and technological innovations that are transforming India’s energy markets, while the <a href="https://www.mercomindia.com/event/mercom-india-renewables-summit-2026/exhibitor" target="_blank" rel="noopener">Mercom India Renewable Summit Expo</a> will bring together renewable energy companies showcasing cutting-edge solutions and services. The expo will provide participants with opportunities to connect with industry leaders, explore new business opportunities, and enhance brand visibility.

Battery Storage Focus Shifts from Competitive Tariffs to Scalability

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					</table>Mumbai-headquartered integrated solar module manufacturer <a href="https://www.renewsysworld.com/" target="_blank" rel="noopener">RenewSys</a> has signed a 1.1 GW supply agreement for its polyolefin elastomer (POE) encapsulants with <a href="https://kosolenergie.com/" target="_blank" rel="noopener">Kosol Energie</a>.
Encapsulant is a protective layer for shielding solar cells from environmental damage.
Under the agreement, RenewSys will supply POE encapsulants to Kosol Energie over a ten-month period from December 2025 to September 2026, supporting the production of advanced, high-efficiency solar modules at Kosol’s state-of-the-art facilities.
RenewSys manufactures solar components, including 30 GW of encapsulants and 4 GW of backsheets, and is installing a high-efficiency solar cell line with a capacity of 4.5 GW. The company generates 640 kW of solar energy across its factories for captive consumption, including 350 kW from ground-mounted systems and 290 KW from rooftop installations.
The company’s POE encapsulants, marketed under the CONSERV range, are UL-certified and suitable for both glass-glass and glass-backsheet modules. The CONSERV E 360 product combines attributes of thermoplastic polyolefin and POE.
According to RenewSys, these encapsulants provide low thermal shrinkage, allowing cutting nearly equal to the glass size with no cell misalignment, better aesthetics, and shorter lamination cycles. They offer ultra-low string shifting, a wide processing window, high gel content of up to 85%, reduced thermal shrinkage, virtually zero thermal creep in glass-glass modules, and testing at 105 degrees for 250 hours.
Kosol Energie is a solar module manufacturer, EPC, and solar solutions provider with over 1 GW executed in utility and commercial, and industrial sectors, and more than 10,000 rooftop projects nationwide.
The company’s in-house capabilities include module and component manufacturing, while its services cover solar park development, battery energy storage systems, floating and ground-mounted systems, and rooftop solar solutions.
In May this year,  RenewSys <a href="https://www.mercomindia.com/renewsys-expands-encapsulant-capacity-to-30-gw-with-khopoli-facility" target="_blank" rel="noopener">announced</a> a significant expansion of its encapsulant manufacturing capacity by adding eight new production lines at its facility in Khopoli, Maharashtra. This development will increase the company’s total encapsulant production capacity to 30 GW.
RenewSys recently <a href="https://www.mercomindia.com/mnre-adds-14670-mw-solar-module-capacity-under-almm" target="_blank" rel="noopener">increased</a> its solar module manufacturing capacity under the updated Approved List of Models and Manufacturers by 1,176 MW.

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