Vietnam Leads on Solar Manufacturing Costs, India Emerges as Strong Second: IRENA

Vietnam has emerged as the most cost-competitive solar PV manufacturing hub outside China, while India continues to strengthen its position as the next most competitive Asian market despite structural cost disadvantages, according to recent comparative industry analysis by IRENA. 

The findings of IRENA underline how cost dynamics in solar manufacturing are increasingly shaped by electricity tariffs, labour costs, policy support and supply-chain integration, with Vietnam currently holding a narrow but decisive edge over India.

Why is Module Production Cheapest In Vietnam? 

Vietnam’s rise as a low-cost producer is largely driven by its favourable electricity tariffs and competitive labour costs. Manufacturing electricity prices in the country average around USD 0.07/kWh, significantly lower than India’s USD 0.095/kWh. Since upstream solar manufacturing—particularly polysilicon, ingots and wafers—is highly energy intensive, this difference has a direct and substantial impact on production costs.

Labour costs also remain competitive in Vietnam, with average engineer salaries around USD 9,000 per year. Combined with favourable government policies and strong private investment, the country has built an increasingly integrated solar manufacturing ecosystem. Vietnam is among the few markets outside China to develop production across the PV value chain and has recently added domestic polysilicon capacity, strengthening supply security and reducing reliance on imports.

As of 2023, Vietnam’s solar manufacturing capacity exceeded 18.4 GW. A fully domestic TOPCon module produced in Vietnam costs around USD 0.180/Wp. However, manufacturers can reduce costs significantly—to approximately USD 0.124/Wp—by importing solar cells from China for final module assembly, reflecting the flexibility of Vietnam’s hybrid manufacturing model.

Despite these advantages, challenges remain. Solar manufacturing is capital intensive, and global module prices are currently under pressure, often falling below production costs. This dynamic is creating financial strain across the value chain, even for cost-efficient producers such as Vietnam.

India-A Strong Contender

India, meanwhile, has emerged as a strong contender and ranks as the second-most competitive Asian manufacturing destination after Vietnam. The cost of producing a fully domestic TOPCon module in India stands at approximately USD 0.191/Wp, slightly higher than in Vietnam. If solar cells are imported for local assembly, costs can fall to around USD 0.126/Wp, narrowing the gap significantly.

India’s key advantage lies in its low labour costs, with average engineer salaries around USD 8,500 per year—lower than Vietnam. Government policy support has also played a major role in accelerating domestic manufacturing. The Production Linked Incentive (PLI) scheme has incentivised companies to establish integrated facilities while meeting quality benchmarks, helping reduce investment risk and attract financing from banks and development institutions.

Concerns In India 

However, electricity tariffs remain a major structural challenge for India. Higher power prices disproportionately affect upstream manufacturing segments such as polysilicon and wafers, which require large and continuous energy inputs. This has slowed the development of fully integrated supply chains compared to competing markets.

Overall, the analysis highlights that while Vietnam currently holds the cost leadership position outside China, India is rapidly closing the gap through policy support, labour advantages and expanding manufacturing capacity. The competition between the two markets is expected to intensify as countries worldwide race to localise solar supply chains and reduce dependence on Chinese imports.