India has pushed back the implementation of its domestic solar cell sourcing mandate, known as the Approved List of Models & Manufacturers (ALMM) List-II, for government-backed, net-metered, and open-access solar projects. Originally set for June 1, 2026, the requirement for solar panels to use exclusively domestically produced solar cells has been extended until December 31, 2026.
Manufacturing Capacity Gap Causes Delay
The Ministry of New and Renewable Energy (MNRE) announced the extension, citing a substantial disparity between India's solar module manufacturing capacity and its ability to produce solar cells domestically. While India boasts a solar module manufacturing capacity of approximately 193 gigawatts (GW), its domestic solar cell production stands at a mere 31 GW.
This mismatch is particularly acute in advanced technologies like TOPCon solar cells, where approved module capacity is nearly 172 GW, but domestic cell capacity hovers around 10 GW. The vast majority of solar cells currently used in India are imported, predominantly from China, creating a dependency that the domestic mandate aimed to reduce.
Industry Flags Operational and Financial Risks
Industry stakeholders, including Contendre Greenergy Ltd., a prominent Indian solar panel manufacturer, had previously warned the MNRE about the potential for severe industry-wide consequences if the original timeline was maintained. In a letter dated May 26, 2026, the company highlighted the significant structural mismatch as not just a supply constraint but a broader operational challenge.
The shortage of domestically available TOPCon cells, for instance, could force module manufacturers to undertake costly modifications to their production lines, seek fresh product certifications, and manage operational disruptions. These adjustments would necessitate additional capital expenditure and could lead to project delays, further straining manufacturers already operating with tight margins and substantial debt.
High Costs and Long Gestation for Cell Production
Backward integration into solar cell manufacturing presents a significant hurdle for many standalone module manufacturers. Developing a 1 GW solar cell manufacturing facility requires an investment ranging from Rs 250 crore to Rs 400 crore, which is five to eight times higher than the cost of module manufacturing. Such projects also demand a gestation period of 18 to 24 months and specialized semiconductor-grade manufacturing expertise.
The government stated that the extension aims to protect investments already made by standalone solar PV module manufacturers, particularly in inventories, by creating additional demand. It also intends to provide sufficient time for these manufacturers to increase their sourcing of solar cells from ALMM List-II-listed domestic producers as the national cell capacity steadily grows. This decision follows detailed deliberations with various segments of the solar industry.