Domestic Content Rule Hits Demand for Rooftop Solar Projects

15 Jul 2026 CW Team

Since the requirement took effect many solar power system providers have reported a fall in demand, with some citing higher component costs and longer procurement timelines. Industry sources said project prices had risen by at least 20 per cent, increasing the upfront cost for household and commercial buyers. The reduction in new projects has been most visible over the last month as installers reassess costs.

Representatives of the Karnataka Renewable Energy Systems Manufacturers Association (KRESMA) reported that customers were reconsidering bookings and that sales volumes had softened. A senior association member conveyed that some buyers were deferring decisions because domestic modules increased system prices. Installers and manufacturers are exploring adjustments to procurement and financing to mitigate the short-term impact.

Market analysts noted that while the immediate effect has been a slowdown in rooftop uptake, the policy aims to build domestic manufacturing capacity and reduce import dependence over time. Several developers indicated they would seek cost efficiencies or pass some costs to end users depending on contract terms and subsidy availability. The ministry has maintained that the requirement will support local industry and long-term energy security even as stakeholders adapt to the new procurement landscape.

Analysts said the sector would undergo an adjustment as suppliers scaled production and price differentials narrowed, with timelines varying by manufacturer and project size. Regulators and industry groups will monitor procurement outcomes and market response to assess whether further measures are required.

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The Ministry for New and Renewable Energy (MNRE) has made it mandatory for new solar projects to use solar cells and modules made in India under the Domestic Content Requirement that came into force on June one. The rule applies to new rooftop and utility-scale installations and is intended to prioritise locally manufactured components. The change has been implemented nationwide by the ministry. Since the requirement took effect many solar power system providers have reported a fall in demand, with some citing higher component costs and longer procurement timelines. Industry sources said project prices had risen by at least 20 per cent, increasing the upfront cost for household and commercial buyers. The reduction in new projects has been most visible over the last month as installers reassess costs. Representatives of the Karnataka Renewable Energy Systems Manufacturers Association (KRESMA) reported that customers were reconsidering bookings and that sales volumes had softened. A senior association member conveyed that some buyers were deferring decisions because domestic modules increased system prices. Installers and manufacturers are exploring adjustments to procurement and financing to mitigate the short-term impact. Market analysts noted that while the immediate effect has been a slowdown in rooftop uptake, the policy aims to build domestic manufacturing capacity and reduce import dependence over time. Several developers indicated they would seek cost efficiencies or pass some costs to end users depending on contract terms and subsidy availability. The ministry has maintained that the requirement will support local industry and long-term energy security even as stakeholders adapt to the new procurement landscape. Analysts said the sector would undergo an adjustment as suppliers scaled production and price differentials narrowed, with timelines varying by manufacturer and project size. Regulators and industry groups will monitor procurement outcomes and market response to assess whether further measures are required.

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