India’s solar manufacturing sector is bracing for short-term pressure in the cell supply chain, with the Ministry of New and Renewable Energy’s (MNRE) mandating that projects use solar cells from the Approved List of Models and Manufacturers (ALMM) from June 2026.

Module manufacturers said that companies without ALMM-listed cell capacity are expected to face constraints in securing compliant cells while they wait for new cell manufacturing facilities to come online over the next few months.

According to the latest ALMM update, 193 GW of module manufacturing capacity has been listed, compared with just over 30.5 GW of cell manufacturing capacity.

The ALMM mandate for solar modules was issued five years ago. Since then, module manufacturing capacity has grown substantially, but cell manufacturing capacity has lagged far behind.

Amit Barve, Chief Executive Officer (CEO) at Rayzon Solar, said the ALMM-II mandate is likely to cause a three- to six-month disruption in the cell supply chain. However, with cell manufacturing facilities at different stages of completion, he hoped the disruption would be unlikely to extend beyond six months.

The gap is even more pronounced in the TOPCon segment. With TOPCon making up the majority of the enlisted module capacity under ALMM, it accounts for only 32% of ALMM List-II capacity.

Tanmoy Duari, CEO at AXITEC Energy India, said the extent of short-term disruptions in the cell supply chain would depend on how quickly additional cell manufacturing capacity comes online.

He added that the implementation of ALMM-II is expected to accelerate domestic investment in cell manufacturing and strengthen India’s solar supply chain over the medium-to long term.

Stakeholders said the mismatch between module and cell manufacturing capacity is likely to lead to higher captive consumption by integrated manufacturers. This could increase standalone module manufacturers’ reliance on standalone cell manufacturers or integrated module-cell manufacturers with excess capacity.

Standalone cell manufacturers account for around 9% of the capacity listed under ALMM-II, which could make it difficult for module manufacturers to secure supplies unless they have secured supply tie-ups.

Sourcing Strategies

Barve noted that, given the gap between India’s module and cell manufacturing capacity, there may not be sufficient surplus capacity for standalone module manufacturers after captive consumption by integrated manufacturers.

This could push standalone module manufacturers to adopt a range of sourcing strategies to avoid disruptions in cell supply.

Duari said that manufacturers may sign long-term sourcing agreements with ALMM-II-compliant cell manufacturers, enter contract manufacturing arrangements, diversify supplier networks, and improve procurement planning and inventory management to minimize disruptions.

Cell Capacity Expansion

Despite potential supply chain issues, module manufacturers said ALMM-II is unlikely to trigger a large wave of expansion into cell manufacturing due to the high capital expenditure required.

According to manufacturers, building a solar cell production line typically requires four to five times as much capital as a module assembly plant of similar capacity.

Barve noted that small module manufacturers may face difficulty securing financing for cell manufacturing facilities due to their smaller module capacities.

Investment decisions will also depend on factors beyond immediate supply constraints. Duari said these include policy consistency, availability of financing, access to technology, and long-term market visibility.

Ishver Dholakiya, Founder and Managing Director at Goldi Solar, said ALMM-II is expected to accelerate discussions on backward integration and long-term supply chain resilience. “While cell manufacturing requires significant capital investment, technological readiness, and scale, the policy direction is likely to encourage more manufacturers to evaluate investments across the value chain over the medium- to long-term.”

Cost Pressures

Module manufacturers said short-term disruptions are likely to push cell prices up. However, the actual impact will depend on demand-supply dynamics, manufacturing ramp-up timelines, global raw material trends, demand visibility, and execution timelines.

Developers said they are already seeing module costs rise by ₹1.5 (~$0.0156)/W to ₹2 (~$0.0209)/W.

Filing a petition with the Karnataka High Court to quash the ALMM List-II mandate, renewable energy industry associations said that the lower availability of TOPCon cells under ALMM could push up project costs by ₹15 million (~$157,000)/MW, as it increases reliance on mono PERC cells. The petitioners said that the higher cost of projects using Mono PERC would stem from lower yield per unit area, which would require additional land, mounting structures, and cables.

Project Viability

The industry expects some near-term adjustment in project economics due to the expected short-term rise in module and cell prices.

However, solar is expected to remain one of the most competitive power generation sources in India.

Duari said rooftop consumers may still find the project economics attractive due to savings on grid electricity over the system lifecycle. “In the open access segment, developers may place greater emphasis on execution efficiency, financing structures, and long-term power purchase agreements to maintain project viability.”

Elevated module and cell prices may slightly affect project payback periods, particularly in highly price-sensitive segments such as rooftop solar and open access projects.

Barve added that for storage-integrated projects, technological advancements, economies of scale, and policy support are likely to improve commercial viability in the long run.

Module manufacturers said that despite rising module and cell costs, solar projects would remain largely viable due to strong long-term demand and rising power tariffs.

Dholakiya noted that the viability of rooftop and open access projects will continue to be shaped by factors such as grid tariffs, financing costs, project scale, and energy consumption patterns.

Relief Unlikely

Recently, MNRE constituted an expert committee to examine applications for time extensions to commission net metering and open-access renewable energy projects beyond May 31, 2026, under the ALMM mandate for cells. It has also provided an exemption for PM Surya Ghar consumers who forgo the subsidy.

However, industry executives said these are only project-specific measures, and it is unlikely such relief will be given to the manufacturing sector as a whole.

Barve said repeated extensions could dent investor confidence, and the government would not want a repeat of the extensions given to ALMM-I.

He added that the ALMM-II mandate was issued early, giving manufacturers sufficient time to become compliant before the deadline. The Ministry has also been consulting with stakeholders to assess the status of proposed cell manufacturing projects and to set a realistic compliance window.

Duari concurred, saying that policy implementation timelines play an important role in accelerating domestic manufacturing investments and creating long-term industry confidence.

Dholakiya said that policy initiatives such as ALMM and the production-linked incentive program have encouraged significant capacity expansion across the solar value chain over the past few years. Module manufacturers also expect similar growth in the solar cell manufacturing segment.

Although the ALMM List-II mandate is expected to cause short-term supply chain disruptions, a strong cell manufacturing pipeline could help ease the impact over the long term.