The government’s decision to include solar cells under the ambit of Approved List of Models and Manufacturers (ALMM) is intended to provide a push to domestic manufacturing while reducing the dependency on imports. However, the industry believes an extension of the time-line beyond April 2026 would help the units to scale up capacities, enabling them to achieve the targets.
“The solar industry supports the push for domestic manufacturing but believes the proposed April 1, 2026 implementation date may be too soon. We suggest extending the timeline to December 31, 2027 to allow solar cell manufacturers to scale up and new players to enter the market,” said Gautam Mohanka, CEO, Gautam Solar.
The ministry of new and renewable energy has released draft amendments to the ALMM order for implementation of ALMM for Solar PV cells proposing to issue List-II of solar PV cells under the list, which shall be effective from April 1, 2026.
The ALMM order released by the ministry back in 2019 had provision for List-I, specifying models and manufacturers of Solar PV modules and List-II, specifying models and manufacturers of Solar PV cells, till date. List-II of solar PV cells has not been issued due to installed capacity of solar PV cells in the country being lower than demand.
“With installed capacity of solar PV cells in the country expected to increase substantially in the next two years, it has been proposed to issue List-II of solar PV cells under ALMM, which shall be effective from 01.04.2026,” the ministry said in its notification.
The domestic industry is booming and the capacity additions are expected to grow in the near term, experts and industry players say.
“This was originally envisaged in 2019, but has been delayed for various reasons, and is crucial to enhance India’s domestic capabilities beyond the assembly of PV modules,” said Sujoy Ghosh, Vice President & Country Managing Director – India, First Solar. He said that India has the potential to counter China’s strategic dominance of global solar value chains, and it cannot achieve this potential by relying on Chinese supply chains for critical components such as cells.
“A gradual transition would ensure that the industry can make a smooth transition from depending solely on Chinese solar cells and mitigate the potential supply bottlenecks and cost escalations, ensuring that project commissioning timelines and India’s net-zero targets remain on track,” Mohanka said.
The country’s solar cell manufacturing capacity has grown in recent years, with the current annual capacity reaching 5.8 GW as of December 2023. The industry expects domestic cell capacity to increase to over 75 GW by 2026.
Mohanka noted that the current capacity is insufficient for the scale needed to meet growing solar deployment targets and the gap between cell and module production (64.5 GW as of December 2023 and projected to surpass 150 GW by 2026) indicates that much more investments in cell manufacturing are needed.
“With its current domestic module production capacity of more than 50 GW per annum, localizing cells and further upstream value chain is imperative,” Ghosh said. He expects the domestic cell production to at least expand to 48 GW per annum with committed investments under the solar production linked incentive scheme in the next few years.
Currently, the cost of importing solar cells from established global suppliers is more competitive than sourcing from domestic manufacturers.
India accounts for over 50% of the cell exports from China, and given the over-supply of the Chinese solar supply chain the imported cells are being dumped at prices below cost of production to clear inventory.
“While it’s true that imported cells have had a cost advantage due to sheer scale, that equation is about to change. As our domestic players ramp up, supported by the right policy framework and investments in innovation, we’ll see costs taper down, enabling us to compete head-to-head with global suppliers,” said Amit Paithankar, CEO, Waaree Energies Ltd.
China, the leading supplier of solar cells, benefits from economies of scale and the huge subsidies provided by the government to the solar industry, which allows them to offer better prices and creates a virtual monopoly, experts say.
“For solar panel manufacturers, this creates a challenge in maintaining competitive pricing for our panels if we are restricted to sourcing cells domestically. If domestic production can improve both in terms of scale and cost efficiency, this could change in the future, but at present, a mandatory shift to local sourcing could hurt both the profitability of local module manufacturing and project timelines,” Mohanka said.
Even as the industry sees the move as a step in the right direction, implementation at the ground level will remain a monitorable.
“It will be important to regularly monitor the actual implementation of solar cell manufacturing capacities in the country to avoid any availability and/or pricing-related issues for projects mandated to use cells from the ALMM list in the future,” said Anujesh Dwivedi, Partner, Deloitte India. “Given the dynamic nature of the solar manufacturing supply chain, the role of MNRE will be critical in ensuring smooth implementation.
From: financialexpress
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