Key Takeaways

• India’s solar cell manufacturing capacity is expected to increase from 32 GW to 100 GW by December 2027.
• Short-term supply shortages are anticipated as domestic manufacturers align with local content requirements under the ALMM List-II.
• Industry leaders emphasize the need for backward integration to achieve long-term energy security in solar manufacturing.

Current State of Solar Manufacturing in India

India’s solar panel production capacity is currently estimated at over 200 GW, with the domestic solar cell manufacturing capacity sitting at approximately 32 GW. Recent reports indicate a shortage of domestically manufactured solar cells due to the implementation of the ALMM List-II, which mandates the use of specific approved models and manufacturers for solar cell projects, especially those geared towards rooftop installations.

According to Vineet Mittal, chairman of Avaada Group, the supply-demand mismatch is a temporary issue as the market adapts to local content requirements. He pointed out that comparing the overall module capacity to domestic cell capacity could be misleading since module plants don’t always operate at full capacity and many projects do not require locally sourced cells. Mittal emphasized that the challenge lies in aligning technology and procurement schedules, not in India’s ability to produce adequate cell capacity.

Avaada anticipates ramping up its cell-manufacturing capacity to 6 GW, focusing on supplying half-cut cells to domestic module manufacturers. Mittal warned against relying on low-efficiency assembly lines, stating that true self-reliance, or “Aatmanirbhar,” cannot be achieved if critical components continue to be imported. This reliance exposes the industry to price fluctuations and trade restrictions, ultimately hindering technology adoption.

Gyanesh Chaudhary, chairman and managing director of Vikram Solar, believes that the ALMM List-II represents a significant shift towards comprehensive domestic manufacturing. He highlighted that backward integration is vital for securing long-term energy needs and that the Indian manufacturing sector is making substantial investments to close existing gaps.

Vikram Solar is on track to have 9 GW of solar cell capacity operational by the end of the fiscal year in 2027. Ravi Verma, a member of the Sustainable Projects Developers Association, commented on the necessity of having genuine demand visible for investors to commit capital to manufacturing. The ALMM is expected to create more predictable market conditions for module and cell production.

Analyst Avinash Gorakshakar explained that the current challenges are multifaceted, with not all module factories running at full capacity and many projects not falling under the domestic-content or ALMM requirements. An ICRA report estimated that India’s cell manufacturing capacity could reach up to 100 GW under ALMM by December 2027, driven by this policy.

Looking ahead, module capacity is anticipated to surpass 165 GW by March 2027. However, there are concerns that excess capacity might trigger consolidation among smaller manufacturers, which could reshape the industry landscape. The move towards expanding domestic production capabilities is aimed at strengthening India’s energy security and reducing dependency on foreign components while adapting to market demands.

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