Crisil expects domestically manufactured solar cells to account for half of India’s total demand this fiscal 2026-27, up from about one-fourth last fiscal. This strong uptick will be driven by the government’s push to reduce dependence on imports, supported by a strong ramp-up in solar cell manufacturing capacity.
However, such large capacity additions are likely to put pressure on capacity utilisation and realisations, potentially extending payback periods for cell manufacturers.
The estimates are based on Crisil’s assessment of solar cell manufacturing capacity expansion plans announced by domestic module and cell manufacturers.
Following the implementation of the Approved List of Models and Manufacturers (ALMM) from April 1, 2024, the Ministry of New and Renewable Energy (MNRE) extended localization requirements upstream through the Approved List of Cell Manufacturers (ALCM), aiming to reduce dependence on imported cells in the solar PV supply chain.
Applicable from June 2026, the ALCM is mandatory for utility-scale projects with bid submission dates after Aug. 31, 2025, and for net-metering and open-access projects commissioned after June 1, 2026. Residential rooftop solar installations under the PM Surya Ghar: Muft Bijli Yojana are exempt from the requirement until March 31, 2027.
“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 Manish Gupta, Deputy Chief Ratings Officer, 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 Kisan Urja Suraksha Evam Utthaan Mahabhiyan, or KUSUM. Meanwhile, imports will mainly be for the pipeline of unexecuted utility-scale projects with bid submissions prior to the August 31, 2025 cut-off. As the earlier project pipeline winds down, import dependence should fall materially starting next fiscal.”
With rising demand and anticipated reduction in imports, several manufacturers are undertaking capital expenditure to set up or expand solar cell manufacturing capacities.
Crisil expects India’s cumulative solar cell capacity to nearly double to 60 GW by the end of this fiscal, with further additions likely over the next fiscal. This could challenge the returns on new solar cell manufacturing capacities.
Says Ankit Hakhu, Director, Crisil Ratings, “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. 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.”
The payback periods are crucial given the rapid evolution of technology in the sector, which can shorten the economic life of assets, particularly where reliance on imported raw materials adds to margin volatility.
Manufacturers pursuing deeper backward integration into ingot and wafer manufacturing—currently almost entirely imported—are likely to see better returns through higher realisations following the government’s notification on the likely applicability of ALMM III (ALMM for solar ingots and wafers) from June 2028 onwards.
A key monitorable is the risk of weaker solar module demand arising from delays in power purchase agreement signings. Moreover, the MNRE has also set up an expert committee to assess ALCM exemption requests for net-metering and open-access projects with installed but uncommissioned modules, or where developers have taken substantive steps toward project implementation. Any material exemption affecting demand for indigenous cells will bear watching.
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