NEW DELHI -- India is setting up a company with initial capital of 20 billion rupees ($405.6 million) to build federal solar projects and help the country reach a target of 20 gigawatts of solar energy capacity by 2022, a top government official said.

The decision to create the company comes at a time when some solar and renewables experts are worrying that due to a shortage of funds and a relative lack of interest by commercial companies, India might miss solar energy targets set under a federal program.

"A...