Domestic solar cells are expected to gain a significantly larger share of India’s solar demand this fiscal year, says Crisil Ratings
New ALCM requirements are set to accelerate the shift toward locally manufactured solar components, highlight the analysts
However, rapid capacity expansion may affect the economics of newly commissioned manufacturing facilities
With the Approved List of Models and Manufacturers (ALMM) List-II in effect since June 1, 2026, domestic solar cells are expected to account for around half of India’s solar cell demand this fiscal year, up from about 1/4th in the previous year, according to Crisil Ratings.
ALMM List-II or Approved List of Cell Manufacturers (ALCM) aims to reduce reliance on imported solar cells and boost local manufacturing. It applies to utility-scale projects with bid submission dates after August 31, 2025, as well as certain net-metering and open-access projects. The Ministry of New and Renewable Energy (MNRE) is offering only case-by-case exemptions (see India Brings ALMM List-II For Solar Cells Into Force).
“The ALCM will sharply reset India’s solar cell supply mix. Domestic supply will gain share and meet around half of the 60-65 GW demand this fiscal, with imports making up for the rest,” said Crisil Ratings Deputy Chief Ratings Officer, Manish Gupta. “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 Kisan Urja Suraksha Evam Utthaan Mahabhiyan, or KUSUM.”
Imported solar cells will mainly support pipeline of unexecuted utility-scale projects with submissions before the cut-off date of August 31, 2025. Starting next fiscal, Gupta expects import dependence to fall materially.
Meanwhile, to support the rising demand for indigenously produced solar cells and lower imports, manufacturers are investing in new and expanded solar cell production facilities.
Crisil projects India’s solar cell manufacturing capacity to nearly double to around 60 GW by the end of the fiscal year, with additional capacity additions likely thereafter, up from 30.3 GW at the end of April 2026 (see India Solar PV News Snippets).
However, the rapid expansion may create challenges for new manufacturing projects, putting pressure on utilization rates and margins.
“The surge in solar cell capacity will redraw project economics. Capacities commissioned by the end of this fiscal could see payback periods stretch by 1-2 years, compared with the 4-5 years it took the early movers integrating backward to solar cell manufacturing,” explains Crisil Ratings Director Ankit Hakhu.
He added, “These early movers benefited from higher premiums and 50-60% capacity utilisation after stabilisation - advantages that are likely to narrow as fresh capacity comes on stream.”
Crisil also noted that manufacturers pursuing deeper backward integration into ingot and wafer production could benefit from future policy measures aimed at increasing domestic value addition. At the same time, delays in power purchase agreement signings and possible exemptions under the ALCM framework remain key factors to monitor.