The government is considering requiring locally made inverters and batteries for the next phase of the PM Surya Ghar solar scheme. This move aims to build a stronger local supply chain, reducing reliance on imported parts. With over 5 million homes already using the rooftop solar program, officials are looking to deepen the domestic manufacturing ecosystem through the upcoming project phase.
The Ministry of New and Renewable Energy (MNRE) is currently evaluating a proposal to mandate local manufacturing requirements for inverters and battery storage systems under the upcoming phase of the PM Surya Ghar Muft Bijli Yojana. This policy, if implemented, would mark a significant shift in how the government manages the solar energy value chain. By requiring that these components be manufactured within India, the government aims to reduce its reliance on global suppliers, much like it has already done for solar modules and cells.
Expanding Domestic Manufacturing Capacity
This initiative comes as the government pushes to meet ambitious energy targets. As of early October 2026, the PM Surya Ghar scheme has already surpassed 5 million residential installations. With a total approved budget of ₹75,021 crore and the scheme running until March 31, 2027, the government is looking for ways to ensure that the economic benefits of this massive rollout stay within the country. Industry groups like the Indian Solar Manufacturers Association (ISMA) believe there is a massive long-term opportunity, estimating that the residential sector has an untapped potential of 115 GW, which could lead to a total rooftop capacity of 132 GW by 2030.
Beyond just the manufacturing mandate, the government has been tightening rules for solar technology. For instance, in August 2026, the MNRE mandated that data generated by solar inverters used under the scheme must be stored within India to protect against cybersecurity risks. Adding a local manufacturing requirement for the hardware itself is the next logical step in this strategy.
Supply Chain and Execution Challenges
While the goal of self-reliance is clear, there are significant hurdles to overcome. India currently relies heavily on imports for critical battery materials, including lithium, cathodes, and anodes. If the government mandates local manufacturing without ensuring that domestic companies have reliable access to these raw materials, it could lead to project delays or higher costs for consumers. Manufacturers will need to scale their capacity rapidly to meet the demand generated by the rooftop solar scheme.
Investors and industry watchers should also monitor the potential for cost increases. If domestic production cannot meet the demand at competitive prices, the speed of solar installations might slow down as developers wait for available components. There is also the pressure of the upcoming deadline for the current phase of the scheme. With the current phase ending in March 2027, the industry is closely waiting for clarity on what the next phase will look like. The government will need to balance its desire for local production with the need to keep installation costs low enough for households to continue adopting solar energy at a fast pace. The next important update to track will be the official notification regarding these domestic requirements and how the manufacturing sector plans to scale up production to meet these new standards.