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Beyond ALMM: The Three Crises Reshaping India’s Solar Manufacturing Photograph: (AI)
While the student agitation vexing the government might be turning into an intractable problem, it has had better luck with the solar manufacturing sector, until recently that is. Unlike the students, the industry has been able to engage with the government like adults, till the June 1 deadline for solar cells came up, that is. That has created a sharp division within the industry between those who can make solar cells and comply with the deadline to use only domestically produced cells, and those who can’t. The latter, who form the vast majority of solar manufacturers for now, seemed to have counted on an extension right upto the last date, following which most were shocked at the decision not to do so.
At SaurEnergy, we had covered their views extensively, while stressing that both existing nameplate capacity for cells, and actual manufacturing was falling well short of demand. It took just over 45 days for the message to get through, as the MNRE, in a convoluted order that seemed to try and cover up for the capitulation under pressure it was, allowed an extension on net metering and open access projects till December 31. Effectively opening up a 10-12 GW demand lifeline for solar makers with no access to domestically made cells.
For module makers in states like Gujarat, which alone accounts for an estimated 45,000 of the roughly 75,000 jobs in standalone module assembly nationally, the cutdown on shifts and complete shutdown of lines might be deferred, but only temporarily.
This is not the crisis anyone predicted when India set out, a few years ago, to build a solar manufacturing base worthy of its 500 GW non-fossil ambitions. What’s actually happening is stranger and more structural: a domestic policy — the long-awaited ALMM List-II mandate requiring locally made cells — has collided with a domestic shortage of exactly the thing it mandates. That squeeze is the clearest single symptom of a larger problem: India’s solar manufacturers are being asked to solve three separate, difficult problems at once, with no guarantee they can do all three before the runway ends.
The three problems are worth naming plainly, because they get conflated in most policy conversations, and each calls for different medicine. First, a supply-side risk sitting one Chinese regulatory notice away from becoming acute — India’s cell and equipment base still runs overwhelmingly on Chinese inputs, at a moment when Beijing has demonstrated, repeatedly, that it is willing to use export licensing as a lever. Second, a technology-obsolescence risk — the generation of cell technology India is scaling up domestically right now is the generation China is already retiring, which makes the export ambition that was supposed to justify all this investment considerably harder to pull off.
Third, the blunt commercial reality that not every one of the 120-plus solar manufacturers currently operating in India is going to survive what comes next, and the government has to manage that shakeout without triggering a panic that undoes the policy’s own goals. Extending the ALMM List-II compliance deadline for net-metering and open-access projects, and quietly backing a Rs 200 crore bet on perovskite manufacturing are just band -aids for the larger challenges. Together, they say a fair bit about how the government is thinking about all three problems at once.
Start with the supply chain, because it’s the most visible constraint right now and the one every Indian manufacturer talks about first, even if they’re careful about how they phrase it in public.
China’s dominance of the upstream solar value chain is known. It controls roughly 93% of global polysilicon capacity, 97% of wafer capacity and 85% of cell capacity, numbers that have barely moved despite everyone’s stated intention to diversify in the past 5 years. What has changed is Beijing’s willingness to treat that dominance as a lever rather than just a commercial advantage. Over 2023-2025, China built out a genuinely comprehensive export-control architecture — gallium and germanium curbs in mid-2023, graphite restrictions that December, solar wafer manufacturing technology added to the restricted-export catalogue in August 2024, and then, in October 2025, the most sweeping package yet: six MOFCOM announcements covering battery materials, production equipment and rare earths, with an extraterritorial reach modelled explicitly on the US foreign-direct-product rule. Most of that package was suspended on the eve of its own implementation, and the suspension runs until November 10, 2026 . A date which sits conveniently or not, sits in the middle of the window Indian manufacturers are currently planning around.
The solar-specific edge of this is the equipment question. Reuters reported in April 2026 that Chinese regulators had opened talks with domestic equipment suppliers, including Suzhou Maxwell Technology, about restricting exports of the advanced tooling needed for higher-efficiency heterojunction cells — aimed initially at the United States, but setting both the mechanism and the precedent for extending the same curbs elsewhere. India, which still imports the majority of the cells it uses outright — roughly 49 GW of Chinese cells against 29 GW of domestic capacity in 2025, per trade data compiled by AL Circle — is nowhere close to equipment-independence even for current-generation TOPCon lines, let alone whatever comes next.
None of this means a cutoff is imminent. It means the opposite kind of risk is baked in: every Indian cell-manufacturing investment being planned today assumes the suspension holds for twelve more months, on equipment, spares and process know-how that trace back to Chinese suppliers. It’s a risk manufacturers are taking involuntarily, because there isn’t currently a faster way to build 30 GW of domestic cell capacity than by buying the machines that make cells from the country that builds them best, at the lowest price.
The second problem is less visible on a factory floor but arguably more corrosive to the export ambition that underpins the whole manufacturing push, and it’s really about timing.
As of early 2026, mono-PERC — the workhorse technology that built out most of India’s existing cell base, has fallen to roughly 3% of Chinese cell production, with independent analysts putting it below 5% of global output. TOPCon, the n-type technology that succeeded PERC, now accounts for 85-95% of Chinese shipments. And China isn’t stopping there: back-contact (XBC/IBC) cells have already reached close to 7% of shipments and are forecast to climb toward 35% by 2029, heterojunction continues to grow alongside it, and perovskite-silicon tandem cells have crossed the 34% efficiency mark in NREL-certified lab tests. Efficient enough for Beijing to exempt perovskite, tandem and gallium-arsenide cells from consumption tax through 2028, a nudge to pull commercialisation forward.
India’s position against that is actually better than “one generation behind” sounds, but more precarious than the industry’s own marketing suggests. On the module side, Tier-1 manufacturers — Waaree, Adani, Tata Power Solar, Premier Energies, Avaada Electro, ReNew among them — have converted meaningful capacity to TOPCon between 2024 and 2026, and TOPCon reportedly crossed half of new Indian residential installations this year. That’s real progress. But at the cell level, where the actual technological lock-in happens, the picture is starker: CEEW’s analysis of ALMM-listed capacity found roughly 13.1 GW enlisted as legacy PERC against just 3.5 GW of TOPCon — meaning close to 80% of India’s own approved cell-manufacturing base runs on technology China has almost phased out. India is, in effect, two to three years behind, while China’s own R&D and equipment-investment attention has already moved two rungs further up the ladder.
The commercial consequence isn’t dramatic — nobody is going to ban PERC modules, and PERC remains, on India’s own market data, the most cost-effective and most ALMM-ready choice for price-sensitive residential deployment under PM Surya Ghar. The more realistic risk is global. Tenders in the Gulf, in Europe, and increasingly within India’s own utility-scale procurement are shifting their baseline specification to TOPCon-or-better, and as Chinese equipment suppliers redirect service support and R&D attention toward XBC and perovskite lines, Indian manufacturers left holding PERC-heavy capacity won’t be told their modules are banned but they’ll simply find that fewer serious buyers want them, spares arrive slower and cost more. The export half of India’s “China Plus One” pitch narrows quietly to whatever residual PERC demand remains in the least sophisticated markets.
The third problem is the one the industry has been most reluctant to face, and it’s arriving faster than most of the sector expected.
India currently has more than 120 solar module manufacturers, with combined installed capacity exceeding 210 GW — a number that looks impressive until you notice that domestic cell capacity sits at roughly 31 GW, and TOPCon cell capacity specifically at closer to 10 GW against nearly 172 GW of approved TOPCon module capacity. That gap between module ambition and cell reality is precisely what’s forcing the shakeout the ALMM List-II mandate has now triggered.
On its FY26 earnings call, Vikram Solar described the cell-level mandate as forcing “a shift from assembly to true manufacturing,” and added that given the barriers of capital access, technology, execution capability and customer relationships, only a few players will ultimately sustain — the company’s own internal estimate is that the industry stabilises around 80-100 GW of sustainable integrated capacity, concentrated among a limited number of full-stack manufacturers. That’s roughly a third of today’s announced module capacity. Emmvee has struck a similar note publicly, framing integration and execution reliability — not scale alone — as the deciding factor for who survives. Insolation Energy’s Manish Gupta has been more explicit still, telling this publication that cell manufacturing demands substantially higher capital, more approvals, more advanced machinery and a far more skilled workforce than module assembly ever did — and that the stabilisation period alone, given continued dependence on Chinese equipment, training and technical support, can run longer than most business plans account for.
What that adds up to, is a wave of strategic transactions already forming quietly beneath the public commentary — capital partnerships, stake sales, and in some cases outright exits, concentrated among smaller and more recently established manufacturers who lack the balance sheet to backward-integrate into cells on their own. Some of this friction has already spilled into the courts: the Karnataka Renewable Energy Systems Manufacturers Association has moved the Karnataka High Court seeking relief from the mandate, a sign of how existential the moment feels to smaller players. And the closures aren’t confined to private minnows — Coal India dissolved its own solar manufacturing subsidiary, CIL Solar PV Ltd, in May 2026, quietly ending what had been pitched as a 4 GW integrated venture, without announcing a replacement plan. If a state-run conglomerate with near-unlimited capital access can walk away from a solar manufacturing bet, the calculus facing a five-year-old module assembler with a bank loan and 200 employees is considerably less forgiving.
None of this is necessarily bad news for the sector as a whole — a shakeout that leaves 80-100 GW of genuinely integrated, technologically current capacity is arguably healthier than 210 GW of module capacity sitting on top of 31 GW of cells. But it’s a genuinely difficult transition to manage politically, because “consolidation” reads very differently in a boardroom than it does to the 75,000 workers currently employed in standalone module assembly, many of them in Gujarat.
Which brings us to the two moves the government has made recently, both of which look, on close reading, less like solutions than like attempts to buy time on two different fronts without admitting it.
The first is the ALMM List-II relief. The July exemption till Dec 31 was framed as a “limited transition window” rather than a retreat, insisting there would be no blanket extension and that projects commissioned after December 31 will have to comply in full. It’s an acknowledgment that the mismatch between 193 GW of module capacity and 31 GW of cell capacity was never going to close by June regardless of what the policy said, and that projects were going to get commissioned on non-compliant cells one way or another.
The second move is smaller in scale but more interesting as a signal. MNRE has earmarked Rs 200 crore for a Perovskite PV Manufacturing Pilot Line under its newly approved Renewable Energy Research and Technology Development programme, running 2026-27 through 2030-31 with a total outlay of Rs 436.93 crore — the single largest allocation within it, alongside up to Rs 200 crore for the newly floated Mission for Advancement in High-impact Areas in Renewable Energy, matched by the Anusandhan National Research Foundation. On its own, Rs 200 crore is a rounding error against the capital already committed to PERC and TOPCon lines — it funds a pilot line, not a market transition. But it’s a tacit acknowledgment of the technology problem above: a manufacturing base built around catching up to yesterday’s Chinese road map has a shelf life, and somebody needs to be working on tandem and perovskite now, rather than once TOPCon itself starts looking dated the way PERC does today.
Neither move fixes the third problem — the coming consolidation — and there’s no obvious policy lever that would, short of picking winners directly, which India’s solar policy has mostly (and probably wisely) avoided doing at the manufacturer level. What the government appears to be betting on instead is sequencing: buy the cell-shortage crisis enough time to resolve through capacity build-out, seed the next-generation technology bet early, and let the market sort out which of the 120-plus manufacturers have the balance sheets to survive the transition to integrated manufacturing. It’s not an unreasonable strategy. But one should be clear eyed about what’s to come.
In March 2026, MNRE finalised ALMM List-III, extending mandatory domestic sourcing to solar ingots and wafers from June 1, 2028. Setting a condition of at least three independent wafer manufacturers reaching a combined 15 GW of capacity to be activated—the deadline is a real possibility, going by investments announced or being made by the top 5- 6 players in the country. However, 15 or 25 GW, the scale of the gap makes today’s cell shortage look almost manageable by comparison.
India’s ingot-and-wafer capacity currently sits at less than 2 GWif at all, against 172 GW of ALMM-listed module capacity and 27-31 GW of cell capacity — an upstream gap wider, proportionally, than the one that just triggered three to eight month cell waiting lists. The capital intensity steps up sharply too: a December 2025 IEEFA assessment put the investment required for 1 GW of wafer-ingot capacity in India at roughly Rs 700 crore, against about Rs 170 crore for a similarly sized module-assembly line — close to four times the capital per gigawatt, before accounting for the tighter process control ingot-pulling and wafer-slicing demand relative to module lamination.
List-III also closes a loophole the cell mandate left open. To qualify for wafer enlistment, a manufacturer has to hold ingot capacity equivalent to the wafer capacity it wants listed, so there’s no route to compliance through importing wafers and finishing them locally — it has to be ingots and wafers together, in-house. That means only integrated players will be able to compete for most of the available business.
Put the December exemption and the 2028 mandate side by side and the sequencing becomes clear. The current relief buys time on a problem that’s fundamentally about capacity catching up to policy. The wafer-ingot mandate is a different kind of test — it asks manufacturers to commit multiples of their existing capital base to a stage of the value chain most have never operated in, on a timeline with almost no obvious political pressure valve, since the trigger condition is set by industry’s own pace of investment rather than by developer lobbying the way the cell deadline was. Manufacturers who treat this year’s cell-level shakeout as the whole story, rather than the first of two rounds, are the ones most likely to be reading a very similar piece about wafers in 2028.
Put the three problems side by side and a pattern emerges that’s easy to miss when each is covered on its own, as most trade reporting tends to do. The supply-chain risk, the technology risk and the consolidation risk aren’t three separate challenges converging on India’s solar manufacturers by coincidence — they’re three faces of the same underlying fact: India built its cell-manufacturing ambition on a compressed timeline, using someone else’s technology and someone else’s equipment, in an industry where the supplier of both has every incentive to keep the frontier for itself.
The ALMM List-II mandate forced a shift from assembly to real manufacturing years before the domestic supply chain was ready, precisely because waiting for readiness would have meant waiting indefinitely. That’s a defensible bet. For the manufacturers living through the cell shortage, the CEEW’s PERC-versus-TOPCon numbers, payback is happening in real time, in the kind of exits being sought by many already. If they survive thanks to the current exemption for cells to December 2026, they really need to ask how they will survive the June 2028 deadline that follows in 18 months. Time flies.
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