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HIGHER CHARGE. A module made with Indian solar cells costs 10 cents more per watt compared with imported cells | Photo Credit: Debarshi
India’s push for solar self-reliance could add nearly ₹30,000 crore to the cost of solar installations this year, as developers switch from cheaper Chinese cells to domestic products under the government’s latest localisation rules.
The second phase of the Approved List of Models and Manufacturers (ALMM-II) came into force on June 1, requiring government and government-backed solar projects to use modules made with Indian solar cells. Except in cases where the Ministry of New and Renewable Energy has granted a month’s relaxation, the new rules effectively shut the door on imported cells.
The policy marks a conscious departure from the least-cost approach that has powered India’s solar expansion over the past decade. Chinese manufacturers can supply solar cells and modules at prices Indian companies cannot yet match. New Delhi has nevertheless chosen to pay a price in the hope of creating an integrated domestic manufacturing ecosystem.
But what exactly is that price?
According to Vinay Rustagi, Chief Business Officer at Premier Energies, one of India’s leading solar manufacturers, a module made with Indian solar cells currently costs around 10 cents more per watt compared with imported cells. Several other manufacturers contacted by businessline broadly confirmed this estimate.
The number assumes significance in the context of India’s rapidly expanding solar market. Crisil Ratings expects India to install 60-65 GW of solar capacity in 2026-27, with domestic manufacturers supplying roughly half the cell requirement. “The ALMM 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 the rest,” said Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings.
If 30-35 GW of solar capacity is built using Indian-made cells this year, the additional cost is ₹26,000-30,000 crore. This is the price consumers, taxpayers or project developers collectively pay for nurturing a domestic manufacturing base instead of relying on cheaper imports.
And this may only be the beginning.
As Rustagi points out, the price gap is likely to widen as India pushes further upstream into manufacturing wafers and polysilicon. The deeper the localisation requirement, the greater the cost difference with Chinese products, whose manufacturers enjoy massive economies of scale. At the same time, India’s annual solar installations are expected to rise steadily. If both trends play out, the cumulative cost of import substitution over the coming decade could easily run into ₹3-4 lakh crore, though the exact figure would depend on installation volumes and how quickly Indian manufacturers close the cost gap.
Whether that is an acceptable price is ultimately a matter of perspective.
Supporters argue that India is buying strategic resilience. Developing a domestic manufacturing base creates jobs, reduces dependence on Chinese imports and strengthens supply-chain security at a time of rising geopolitical tensions. Critics counter that India’s dependence on China will not disappear overnight because the country will continue importing key inputs such as polysilicon, wafers and manufacturing equipment for years to come.
There is another side to the debate. Cheaper Chinese modules translate directly into cheaper solar electricity, benefiting distribution companies, industries and consumers alike. China is willing to operate on wafer-thin margins — or even losses in some segments — to consolidate its global dominance in solar manufacturing. Some argue that India should take advantage of those low prices rather than asking consumers to bear the additional cost of protection.
There is no definitive answer. The economics of domestic manufacturing depend as much on strategic priorities as on financial calculations. The debate over industrial policy versus free trade is unlikely to end soon. But whatever one’s position, the numbers help frame the discussion: India’s determination to build a self-reliant solar manufacturing industry comes with a measurable price tag, one that is already running into tens of thousands of crores each year.
Published on July 6, 2026
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