In May last year Fortum India, a subsidiary of a Finnish solar developer, won the bid for a solar power project in the state of Gujarat. The project was due to be completed three months ago and would have generated enough electricity for 200,000 homes.

But like many other solar power projects in the country, it’s been delayed as Fortum India struggles to source and pay for necessary components.

“For the last six months, we have not been able to finish developing any new projects,” said Manoj Gupta, who oversees Fortum India’s solar projects in India.

Another Indian government policy that mandates that solar components can only be bought from government-approved manufacturers to ensure that the modules and cells are of good quality is also stalling projects, according to analysts.

Developers are unable to purchase from southeast Asian countries as manufacturers there have yet to be approved or have not applied. Many of those countries have free trade agreements with India which would make them exempt from import taxes.

“The situation is quite grim today,” said Vinay Rustagi, managing director at the renewable energy consultancy Bridge to India. “Global supply chain issues, material shortages and, of course, the duty on solar components has led to a lot of projects being postponed.”

Rustagi said the growth in domestic manufacturing as a result of the tax is “encouraging, but I do not think it is sustainable.” He added that the government “should be aiming to create strong domestic capabilities that can be a preferred choice without any taxes or duties.”