At Sidebar we closely track regulatory shifts that shape India’s energy and Infrastructure sectors. In this context, recent developments in solar photovoltaic (PV) manufacturing especially concerning the classification and treatment of diffused and undiffused wafer mark a significant policy pivot aimed at deepening domestic value addition.

Solar Photovoltaic (PV) manufacturing, wafers are thin slices of silicon that form the foundational material for solar cells. These wafers pass through several processing stages before they can generate electricity. One of the most critical steps is diffusion, where dopants like boron or phosphorus are introduced to form a p-n junction, giving the wafer its ability to convert sunlight into energy.

Undiffused Wafers (Black Wafers): These are raw silicon wafers that haven’t yet undergone the diffusion process. They mark an early point in the manufacturing chain and require significant additional processing- including diffusion, metallization, anti-reflective coating, and testing to become complete solar cells.

Diffused Wafers (Blue Wafers): Often referred to as “blue wafers” due to the anti-reflective coating applied after diffusion, these wafers have already undergone several key stages, frequently outside India. When imported and finalized locally, they contribute minimal domestic value addition, a practice that has diluted the spirit of India’s local manufacturing push.

The Policy Shift: MNRE’s New Mandate (April 2025)

To close this compliance loophole and encourage real domestic value addition, the Ministry of New and Renewable Energy (MNRE) issued a critical policy update on April 3, 2025.

Only solar cells manufactured in India using undiffused silicon wafers (black wafers) will be considered DCR-compliant.

This means that pre-diffused silicon wafers, commonly known as blue wafers, will no longer be eligible under the Domestic Content Requirement (DCR) category. To qualify, all critical manufacturing processes: including diffusion, printing, metallization, application of the anti-reflective coating, and final testing must now be carried out entirely within India. This marks a decisive push toward full-scale domestic manufacturing and significantly limits the use of semi-processed imports that previously met DCR norms.

The new rule will apply to all solar projects bid after April 1, 2025, but its enforcement will begin from June 2026. This phased implementation provides the industry with a 14-month transition period to align their operations, upgrade infrastructure, and adjust sourcing strategies accordingly. The extended timeline is intended to give Indian manufacturers and EPC firms ample time to invest in upstream manufacturing capabilities and recalibrate their supply chains to meet the revised DCR compliance requirements.

Implications for Indian Manufacturers

The revised policy is expected to significantly boost local value addition by requiring that all essential processes—from undiffused wafer to finished solar cell—be completed within India. This shift promotes full-stack solar manufacturing and strengthens India’s role in the global solar value chain. However, it also presents challenges for partial assemblers who previously relied on importing pre-diffused blue wafers. These facilities will now need to either invest in additional equipment or switch to sourcing undiffused (black) wafers. On the upside, the mandate opens up new capital expenditure opportunities, as manufacturers are encouraged to invest in upstream technologies such as diffusion furnaces, metallization units, and coating lines.

Implications for Importers and EPC Companies

For importers and Engineering, Procurement, and Construction (EPC) companies, the policy requires a fundamental realignment of existing supply chains. Developers who previously sourced DCR-compliant cells manufactured from imported blue wafers will now need to forge new supplier partnerships or turn to domestic manufacturers with complete in-house processing capabilities. In the short term, this could lead to higher costs, as the number of Indian firms equipped to handle the entire cell manufacturing process is currently limited. However, as capacity builds up over time, these costs may stabilize.

Implications for Policy and the Broader Ecosystem

From a policy perspective, the move strongly aligns with the Atmanirbhar Bharat initiative, reinforcing the idea that true DCR compliance involves more than just final assembly. While India still lacks commercial-scale wafer production, the country will now import wafers at a much earlier stage—specifically, undiffused ones—thus preserving the intent behind promoting domestic manufacturing. In the long run, this policy is likely to act as a catalyst for upstream development, encouraging investment in wafer production and other infrastructure that currently represent critical gaps in India’s solar ecosystem.

Conclusion

India’s updated solar manufacturing norms represent a strategic leap toward building a genuinely self-reliant clean energy ecosystem. By clearly disqualifying imported, semi-finished blue wafers from DCR compliance and enforcing local processing from the black wafer stage onward, the MNRE has taken a firm stand to preserve the integrity of the DCR policy.

While the transition may present short-term hurdles such as sourcing challenges and elevated costs, the long-term benefits are substantial. This policy will incentivize upstream manufacturing, deepen domestic capabilities, and push India closer to becoming a global solar manufacturing hub aligned with both quality benchmarks and national interests.

With the enforcement window extending to June 2026, the industry now has a clear roadmap and timeline to evolve and a strong incentive to do so.

In a Nutshell

• MNRE mandates use of undiffused wafers for DCR-compliant solar cells.
• All core manufacturing steps must now be completed in India.
• Rule applies to bids after April 1, 2025; enforced from June 2026.
• Aims to boost domestic value addition and reduce semi-finished imports.
• Encourages upstream investments in diffusion and metallisation processes.
• May lead to short-term cost increases, but enhances long-term self-reliance.
• Strong alignment with Atmanirbhar Bharat and India’s solar growth strategy.