The country has slightly more than 1,000 megawatts of solar power and the government aims to produce 22 gigawatts of solar power by 2022.
"The momentum is shifting from the center (the national government) to the states," Vineeth Vijayaraghavan, who publishes a newsletter on the Indian clean tech industry, was quoted as saying by The New York Times.
In the last five months, five Indian states have announced plans to bring a combined total of 6,150 megawatts of solar power online within five years, with individual state targets ranging from 350 megawatts in Rajasthan to Tamil Nadu's goal of 3,000 megawatts by 2015.
In what was the country's single biggest solar tender, the state of Tamil Nadu announced last October that it was seeking bidders to build 1,000 megawatts of solar power each year until 2015. Bidding closed Jan. 6.
But response was lukewarm, with the government receiving bids for only a little less than 500 megawatts, less than half the target.
Of the 92 applications, 83 were for 5 megawatts or less.
Bidders included U.S. company Sun Edison, for a total of 50 megawatts.
The absence of Indian solar players such as Tata Solar and Moser Baer was notable, said Narasimhan Santhanam, director of consultancy Energy Alternatives India, the Economic Times reports.
Unlikely Indian bidders included a gold retailer, a brewery and a hair care company.
While initial interest from solar developers was intense when the bidding was announced, some companies were put off by several factors, including vague rules about when payments would be made and the poor financial health of the state's power distributor, known as Tangedco, which could hamper the ability of solar builders to secure loans, The New York Times reports.
In addition, bidders were expected to move ahead at what could be considered an unreasonable pace: with land acquisition, financing and building of the solar farms resulting in the power being switched on by the end of this year.
With a 4,000 megawatt deficit in power production, Tamil Nadu currently endures rolling blackouts.
As part of its solar energy policy, the state also aims to establish a domestic solar manufacturing industry. Tamil Nadu's government said it would provide "appropriate" tax incentives to attract both domestic and international investors.
But a report in the Economic Times Wednesday says that Indian solar equipment manufacturers are facing difficulties due to sluggish domestic demand and decreasing prices of solar panels internationally. Most of the manufacturers, the report says, have either shut down operations or scaled down to 15 to 30 percent of capacity.