Even though the government’s decision to include solar cells — and not just PV modules — under the Approved Lists of Models and Manufacturers (ALMM) starting June 1, 2026, but may in the short term inflate delivered costs of domestic modules, drive up the capital cost of projects and affect timelines, analysts say.
Additionally, high prices of domestically manufactured cells can be a bane because they would tend to impact the tariff levels bid at solar power project auctions, according to Crisil Market Intelligence and Analytics.
The industry experts believe that while the domestic supply of solar cells is expected to increase, there could be a transient shortfall till manufacturing ramps up.
As per Crisil, the prices of Indian solar cells today are 1.5-2.0 times more than alternatives from China even after basic customs duty. “Such high prices can drive up the capital cost of solar power projects by Rs 5-10 million per MW and require tariff increase of 40-50 paise per unit as offset based on current market dynamics,” it said.
CareEdge Ratings too noted that the introduction of ALMM-II for domestic cells may result in an increase in the delivered cost of domestic modules by 6-7 cents per Watt-Peak, leading to a rise in solar tariffs by 40-50 paise per unit for the short run till local cell supply scales up.
Analysts also say that the ALMM cell mandate could also pose challenges for companies that don’t develop domestic cell manufacturing capability as they would not be in compliance and could face module-supply challenges, which can impact their market share over the long term.
“Of the 62 GW of installed capacity as of December 2024 owned by 79 entities, only 13 have an integrated cell manufacturing base. The rest will have to decide between expanding capacity or competing for domestic cell supplies,” said Surbhi Kaushal, Associate Director – Research, CRISIL Market Intelligence and Analytics. “Although 12 non-integrated players have announced plans to install 32 GW capacity by 2029, the relatively higher capital cost of cell manufacturing plants compared with module assembly lines, and falling prices of the solar value chain could slow things down.”
Crisil estimates domestic solar cell manufacturing capacity to more than quadruple to 43-47 GW by June 2026 from 10 GW in March 2024. The average annual demand is expected to be 40-45 GW between fiscals 2027 and 2030.
The capacity listed under the ALMM-I reached 60 GW as of September 2024, although a large section is in the ramp-up phase, barely sufficing to meet the domestic module requirement, CareEdge said.
The government has imposed a basic customs duty of 25% and 40% on Chinese cells and modules respectively. Even though it increases the landed cost by 4-5 cents/Wp for imported modules and 1-2 cents/Wp for imported cells, Domestic Content Requirement (DCR) modules are pricier than both imported as well as non-DCR modules on a landed basis, according to CareEdge.
“Although the impending implementation of ALMM-I led to a surge in module imports in H2FY24, resulting in module imports of $4.35 billion in FY24, imports moderated to $1.02 billion in the first half of FY25, compared to $1.14 billion in the same period of FY24,” CareEdge said in its report.
Cell imports gradually increased to $1.31 billion in FY23 and $1.85 billion in FY24 but dropped to $0.74 billion in the first half of FY25, likely due to enhanced domestic cell supply as Indian players continue to scale up cell capacities.
