Domestic solar cell supply is expected to meet around half of the 60-65 GW demand this fiscal, representing a significant increase from the fourth share achieved in FY26, according to Crisil Ratings. As reported by Business Standard, the shift will be driven by demand from newer utility-scale bids, net-metering and open-access projects, and government-backed schemes such as Kisan Urja Suraksha Evam Utthaan Mahabhiyan (KUSUM). Imports will continue to meet the remaining demand, primarily for the pipeline of unexecuted utility-scale projects with bids submitted before the August 31, 2025 cut-off. The increase follows the government's push to localise the solar photovoltaic supply chain through the Approved List of Cell Manufacturers (ALCM), which mandates the use of domestically manufactured solar cells for a wide range of projects from June 2026.
While the government's push to reduce import dependence has resulted in strong ramp-up in solar cell manufacturing capacity, such large capacity additions are likely to put pressure on capacity utilisation and realisations, which can stretch payback periods, according to Crisil. As explained by Crisil Ratings, domestic solar cell manufacturing capacity is expected to nearly double to about 60 GW by the end of the current fiscal year as companies accelerate investments in new facilities and expansion projects. The surge in solar cell capacity will redraw project economics, with capacities commissioned by the end of this fiscal year seeing payback periods lengthen by 1-2 years compared with the 4-5 years it took early movers integrating backward to solar cell manufacturing. Early movers benefited from higher pricing premiums and utilisation levels of 50%-60% after stabilisation, advantages that are likely to diminish as more capacity comes online.
After the Ministry of New and Renewable Energy (MNRE) implemented the Approved List of Models and Manufacturers (ALMM) from April 1, 2024, it decided to upstream the production of solar cells through the Approved List of Cell Manufacturers (ALCM), or ALMM List-II, which became applicable from June 2026. As reported by Business Standard, the government has established an expert panel to assess ALCM exemption requests for net-metering and open-access projects with installed but uncommissioned modules, or where developers have taken substantive steps towards project implementation. The Ministry of New and Renewable Energy (MNRE) said projects commissioned after June 1, 2026 will have to comply with ALMM List-II provisions mandating the use of approved domestic solar PV cells. However, to protect investments already made, certain renewable energy projects may be granted appropriate time extension on a case-to-case basis.
With rising demand and anticipated reduction in imports, several manufacturers are undertaking capital expenditure to set up or expand solar cell manufacturing capacities. According to Crisil Ratings, manufacturers pursuing deeper backward integration into ingot and wafer manufacturing are expected to see better returns through higher realisations following the likely applicability of ALMM-III from June 2028 onwards. As noted by Crisil, as the earlier project pipeline winds down, import dependence should fall materially starting next fiscal. "The ALCM will sharply reset India's solar cell supply mix," said Manish Gupta, deputy chief ratings officer at Crisil Ratings. "The shift will be led by demand for indigenous cells from newer utility-scale bids, net-metering and open-access projects, and government-backed schemes such as KUSUM."
