A group of state-owned Indian companies have signed an initial agreement for setting up what the government says is the world's largest solar power plant.

The 4,000-megawatt plant in the northwestern state of Rajasthan would be spread across 19,000 acres.

"The MOU signed today will have to get the approval of the Cabinet and then the project will move forward," Minister of Heavy Industries and Public Enterprises Praful Patel said at the signing ceremony in New Delhi Wednesday, Press Trust of India reports.

The consortium of six state-run companies includes Bharat Heavy Electricals Limited, known as BHEL, and Power Grid Corporation of India Limited.

Construction for the first phase of 1,000 megawatts is expected to start in about three years. The plant will rely on crystalline silicon technology.

The Hindu newspaper cited New and Renewable Energy Minister Farooq Abdullah as saying at the ceremony that the project was "a giant step towards unleashing a revolution" for achieving bigger goals in solar energy.

The plant is expected to reduce India's carbon footprint by more than 4 million tons per year, Bharat said in a news release.

The Wall Street Journal reported that the Indian government plans to invest $480 million to set up the country's first unit for manufacturing solar silicon cells to be used in the Rajasthan solar project.

"Today, not a single silicon chip for solar energy is manufactured in India," Patel said Wednesday on the sidelines of the signing ceremony for the solar plant, the Journal reported. "Every solar panel which is made in India is assembled while all the material comes from China, Europe and some other countries."

Under India's Jawaharlal Nehru National Solar Mission, which began in 2010, the south Asian nation aims to increase its solar power capacity to 20 gigawatts by 2022 from around 2.2 gigawatts installed now.

Initial guidelines for the solar mission mandated that cells and modules for solar PV projects based on crystalline silicon be manufactured domestically.

As a result, many developers opted for thin-film modules.

"We have such an ambitious program to have thousands of megawatts of power from solar in next 15-20 years," Patel said, adding that India has no other alternative but to manufacture the basic raw material domestically to keep costs down.

The consulting firm Frost and Sullivan, in a report last year, estimated India's demand for chemicals and materials used in solar cells and modules will increase 22.2 percent until 2015 and module components by 25 percent during the same period.