Investments of $250 million are planned over the next three years, and capacity should increase by fives times during the first two years of operation, said Deepak Puri, chairman and managing director of Moser Baer. Sales of about $100 million annually are expected once the plant becomes fully operational.

Cypress Semiconductor is also looking for a site in India, and is willing to invest about $50 million in a facility to make solar cells and wafers. But no decision has been announced. India's earliest solar cell and module facility is currently being set up in Bangalore by Tata BP Solar India Ltd., a joint venture between Tata Group and BP Solar of the U.K.

India, which faces a perennial shortage of electricity, is set to emerge as a big market for solar cells. However, most players from Tata BP Solar to Moser Baer are targeting the export market.

The plans of New Delhi-based Moser Baer come within a fortnight of the release of a national policy on semiconductor and electronics manufacturing, which promises subsidies and tax breaks for solar fabs. More solar fabs will likely be built in India once more details of the policy emerge.

Moser Baer is a well known Indian hardware manufacturer, with products ranging from CDs and DVDs to USB drives. It also does contract manufacturing for foreign firms.