Solar Value Chain in India: From Polysilicon to Solar Panels, Costs, Tech Shifts & 2026 Outlook

Most people think solar starts with a panel on a roof.

But the truth is… that panel is just the final “pretty” part of a long value chain that begins with plain old sand, travels through factories and chemicals, and finally lands at your meter as cheaper electricity.

And India? India isn’t casually playing here. It’s in full-scale build mode.

India’s power story first: how big are we today?

India is already the 3rd-largest producer and consumer of electricity globally, with a total installed power capacity of 510 gigawatts (GW) as of November 2025. 

Here’s the installed capacity build-up over the last decade with different power sources:

Source: https://iced.niti.gov.in

India’s power mix is clearly shifting — coal’s share has steadily come down from ~57% (FY18) to ~46% by FY25–26, while renewables keep expanding their footprint. 

Renewables now contribute ~50% of the total installed capacity, and solar energy alone accounts for around 26%, making it India’s largest non-fossil power source.

In fact, solar capacity exploded from 7 GW in 2015 to ~133 GW in 2025 — a near 19x jump, translating into ~34% CAGR over the decade. 

Now here’s the fun part.

Solar doesn’t grow just because the sun is free.
It grows when the value chain becomes strong enough to deliver panels at scale, install them quickly, maintain them for 25 years, and still make a profit without eroding margins.

India is pushing hard toward its national goal of 500 GW of non-fossil capacity by 2030. With ~254 GW already installed by late-2025, India needs ~246 GW more over the next five years. That implies ~49 GW of net non-fossil additions per year.

That means the next phase is not “growth” — it’s execution at scale.

Solar is very much a state-led story, driven by a few heavyweight regions that have the land, grid appetite, project momentum, and policy clarity.

India’s top Solar States

(as of nov’ 25)

Source: https://iced.niti.gov.in

What this map really tells you is simple: India’s solar capacity is being anchored by a few mega-scale states. Rajasthan and Gujarat dominate the utility pipeline, while Maharashtra, Tamil Nadu, and Karnataka add industrial depth — meaning solar demand stays consistent even when tariffs fluctuate.

These states are powered by ultra-mega solar parks, where land, evacuation, approvals, and infrastructure are bundled together to enable faster deployment.

Here are the top 3 biggest solar parks that shaped India’s utility-scale solar journey:

And this is exactly why the value chain matters right now.

Because when capacity addition is happening at this level, small disruptions become expensive:

• A delay in cells/modules doesn’t just delay one project — it hits commissioning timelines across states.

• One price spike squeezes EPC margins, pushes developers to renegotiate, and slows tender execution.

• Tech shifts (like PERC → TOPCon) can make older inventory irrelevant faster than companies expect.

So yes, solar demand is strong. But the real story is deeper:

India is no longer only installing solar. It’s actively restructuring the solar value chain to control it. 

The Solar Value Chain: Who controls what, who earns what, and why tech is changing everything

If you want the real solar story, don’t start with “panels”.
Start with control.

Because the solar value chain isn’t a straight line — it’s a tug of war between technology, pricing power, and supply security. And India’s entire manufacturing push is basically an attempt to move from being a price-taker to becoming a price-setter.

So let’s break it down like a pro — stage by stage, with what’s used today, what’s changing now, and what it means for margins and competitiveness.

Where it all starts: Quartz → Polysilicon 

Solar’s raw material is quartz (silica). But the real gatekeeper is polysilicon — ultra-high-purity silicon produced through an energy-intensive process.

This is the most globally concentrated part of the chain. Historically, it’s been dominated by China-backed capacity, with China contributing a major share of global supply (~80%) and a handful of large producers controlling volume.

Polysilicon isn’t just an input — it’s the start of cost volatility; so when polysilicon prices spike, the whole chain gets squeezed:

• Module prices rise

• EPC contracts get stress-tested as tender pipelines slow down/margins squeezed

• Project IRRs compress

India is still structurally dependent here, which is why the strategy has been to strengthen cells/modules first before fully locking upstream.

Polysilicon price trend: why 2023–24 became a short-term “gift”

Globally, polysilicon prices peaked during the post-COVID supply squeeze, then fell sharply as new capacity (largely from China) came online and demand normalised. By 2023–2024, the market moved into oversupply, pushing prices down to multi-year lows, and that decline continued into the period till mid 2025.

For Indian solar companies, this drop was a short-term boost. Lower polysilicon meant cheaper wafers/cells and softer module pricing, which helped manufacturers protect spreads and gave developers room to bid aggressively without choking economics. The result was a temporary margin expansion and faster execution until the next pricing cycle resets.

January 2026 update: China has announced it will scrap VAT export rebates on photovoltaic products from 1 April 2026, which could lift China’s PV export prices and reduce the discount-led pressure global buyers have gotten used to.

Midstream: Ingots & Wafers

Once polysilicon is processed, it becomes ingots, which are sliced into ultra-thin wafers. Wafers look simple, but they’re extremely sensitive to:

• Purity and defect density

• Thickness uniformity

India is still under-built in wafers, which keeps the industry exposed to global wafer pricing cycles. And technology is forcing this layer to evolve:

• Wafer sizes have been scaling up

• The industry shifted from older technology to newer ones to reduce the cost per watt

• Wafer quality requirements are rising because TOPCon/HJT is far more efficient than older tech

Owning wafers gives cost stability + supply certainty. Not owning them means dependence — and that dependence hits margins.

Cell manufacturing: This is the “profit engine” of the value chain

If modules are the product, cells are the differentiation.This is where efficiency, yield, and technology decide who wins long-term.

Here’s the evolution that shaped the industry:The tech timeline (what was used vs what’s being used now)

1) Multi-crystalline: older generation

• Cheaper historically

• Lower efficiency

• Fell out of favour as mono tech matured

2) Mono PERC: the workhorse for years:Mono PERC became dominant because it balanced:

• Decent efficiency

• Mass manufacturability

• Cost advantage at scale

3) TOPCon: today’s fast-moving standard:The industry is now shifting toward TOPCon because it delivers:

• higher efficiency per module

• better performance at scale

• improved economics for utility projects (more output per sq meter)

4) HJT: premium tech, not mass yet in India:HJT is a higher-cost, high-efficiency tech that can win in:

• Premium segments

• Future high-performance deployment.

• Demands more capex and tighter process control.

Why the PERC → TOPCon shift is happening 

Because the industry is not chasing “better panels”.
It’s chasing cheaper electricity per unit area.

When TOPCon gives more watts for the same footprint:

• Developers need less land per MW

• BOS cost per watt drops (structures, cables, labour)

• project IRRs improve — even if module prices are slightly higher
  
  

That’s why TOPCon isn’t just a tech upgrade.
It’s a project economics upgrade.

Modules are where cells become a product that can survive outdoors for 25 years.

A standard module is built using:

• glass, EVA, backsheet

• aluminium frame

• junction box & cables
  
  

Front glass — strength, safety, and output stability

Front glass sounds simple, but it’s doing a lot:

• protects cells from physical damage

• handles wind load and thermal expansion

• affects light transmission (and therefore generation)
  
  

In Indian conditions (heat + dust + storms), glass quality matters more than most people think. Cheaper glass can lead to micro-cracks and faster performance loss.

Encapsulant (EVA) — the glue that silently protects everything

EVA (Ethylene Vinyl Acetate) is used as an encapsulant — it holds the cells in place and protects them from moisture and mechanical stress.

Bad EVA quality or poor lamination creates long-term problems:

• water ingress

• delamination

• hotspots

• accelerated degradation

Backsheet — the real “weather shield” at the back

The backsheet acts like the module’s insulation and outer skin.
 It prevents moisture, UV stress, and electrical leakage.

A weak backsheet can lead to:

• cracking

• yellowing

• insulation breakdown

• higher safety risk over time

This is one reason module buyers (especially utility-scale projects) don’t just compare “price per watt” — they look at warranty credibility + long-term reliability.

Aluminium frame — structure that decides durability

The aluminium frame is not decoration.
 It’s the structural backbone that helps the module:

• maintain rigidity

• survive wind loads

• stay stable during transport and installation

• avoid mechanical distortion over time
  
  

In mega solar parks, thousands of modules get transported, stacked, moved, installed fast — frame strength becomes real-world performance.

Junction box & connectors — the part that can kill the whole module

The junction box is where electrical output is collected and sent to the system.
 It’s small, but if it fails, the entire module can underperform.

Poor junction boxes can cause:

• overheating

• connector issues

• power loss

• even safety hazards in extreme cases

So yes, even “small parts” affect whether the module performs like a high-quality asset or a risky commodity product.

Mono vs Poly— and why poly is dying today

At the module level, there are two major types of panels you’ll hear everywhere:

Monocrystalline (Mono): the market’s default choice today

Monocrystalline panels are the sleek black ones. They’re more efficient, more space-efficient, and simply perform better where area is limited — especially rooftops and dense installations. That’s exactly why they’ve become the most common choice globally.

Monocrystalline panels had ~49% share of the PV market in 2025, making them the dominant segment due to higher efficiency and better space utilisation.

Polycrystalline (Poly): cheaper, but fading fast

Polycrystalline panels are the older blue ones. They were popular because they were cheaper, but the trade-off has always been lower efficiency.

And now the market has moved on.

Polycrystalline is almost phased out, with market share falling rapidly as most new installations prefer monocrystalline due to better performance.

The shift from Poly → Mono didn’t just change panel color. It changed the entire chain’s efficiency expectations, technology investments, and manufacturing direction.

Solar isn’t one market — it’s On-grid vs Off-grid

On-grid solar 

On-grid systems are connected directly to the electricity grid. They don’t need a battery, which makes them the cheapest and simplest format to scale.

On-grid accounts for ~80% share in India, largely because the electricity infrastructure is already established and grid connectivity is wide.

This is why India’s solar scaling has been fastest in:

• utility-scale projects

• grid-connected rooftop systems

• industrial/commercial consumption models

Off-grid solar + BESS

Off-grid is battery-based. It’s designed for areas where grid supply is unreliable or missing — and yes, it’s more expensive because storage adds cost.

Off-grid systems are mainly used in remote areas and are expensive, but hold strong potential for factories, offices, and power-critical setups like data centres that need electricity beyond daylight hours.

The Government of India has already approved a Viability Gap Funding (VGF) scheme for 13.22 GWh of Battery Energy Storage Systems (BESS) currently under implementation, backed by ₹3,760 crore of budgetary support. On top of this, the Ministry of Power approved another VGF scheme in June 2025 for an additional 30 GWh of BESS, with ₹5,400 crore of financial support from the Power System Development Fund (PSDF). 

 The future is looking bright in this segment.