Solar industry split as locally made cell mandate kicks in on Monday
By Nandini Keshari
Renewable energy (RE) developers will be required to source solar modules, which must use only locally manufactured cells, from Monday. All the net-metering projects and open-access RE power projects, which will be commissioned on or after Monday, will have to mandatorily source their solar PV modules from Approved List of Models and Manufacturers (ALMM) List-I and solar PV cells from ALMM List-II.
However, for projects in which solar modules have already arrived at the project sites, or installation has been completed but not commissioned yet, or where developers have started grounding of projects, an extension may be allowed to protect investments that have already been made.
The government decision came following extension requests from industry representatives.
“Such cases may be considered for appropriate time extension on a case-by-case basis, in a transparent manner, after objective assessment of the supporting information/documentary proofs provided by such developers,” the ministry of new and renewable energy (MNRE) said.
The immediate challenges are likely to be faced by commercial and industrial and open-access developers, said Rohit Vijay, Associate Fellow, CSEP. “Many of these projects depend on high-efficiency TOPCon technology to maximise energy generation from limited land availability. For projects that are already under implementation, changing technology or procurement plans at this stage is often not practical,” he added.
Some developers are facing the possibility of higher project costs, which could translate into an increase in tariffs of around 30-40 paise per unit, he added.
At present, a significant share of the approved cell capacity currently belongs to vertically integrated manufacturers, limiting the availability of cells in the open market and putting upward pressure on prices, Vijay said.
Industry leaders are divided on the government’s decision. While some said that a blanket extension was required, others were of the opinion that there was no need for any extension as the country has enough capacity.
“There should be a blanket extension for two months for all commercial and industrial projects to comply with the norms due to the gas and diesel shortage caused by the Iran war, which slowed construction. This was a force majeure situation. Otherwise, we are supportive of the ALCM regulation that promotes Make in India,” said Pinaki Bhattacharyya, founder, MD and CEO, AMPIN Energy Transition.
Solar module maker Premier Energies believed that concerns over limited domestic cell manufacturing capacity were unnecessary, especially as large utility-scale solar projects bid out before August 2025 were exempted from the domestic sourcing requirement for solar cells.
“We have enough cell capacity and more is coming in the next 12 months,” said Vinay Rustagi, chief business officer, Premier Energies. “For the manufacturers, the government’s reaffirmation of policy timeline is a big relief since we have invested huge amounts of capital to scale up our capacities and invest in the latest technologies. In such a heavily capital-intensive sector, we need policy stability to attract investors,” he added.
Ganesh Moorthi, Chief Technology Officer, Luminous Power Technologies, believed that it was expected to accelerate investments across the solar-value chain, improve supply-chain resilience, and create long-term opportunities for domestic manufacturers. “It will also encourage healthy competition while driving greater focus on research and development, technology innovation, and quality enhancement across the industry,” he said.
Another industry leader, Sunkind India’s Founder and MD Hanish Gupta, said that it was only a transitional challenge, given the scale and pace of India’s RE ambitions. “In the short term, the market is likely to see some adjustment,” he said, while acknowledging the concerns for developers managing tight project timelines and cost commitments. He added, “The key concern is the massive price difference between imported and domestically manufactured cells, which could put pressure on project economics. In the near term, both supply availability and pricing are likely to remain sensitive issues as the industry adjusts to the transition.”
Other industry executives agreed with him. “While there may be some short-term challenges related to cell availability and pricing, the long-term benefits far outweigh the transition concerns,” said Pawan Kumar Garg, founder and joint managing director, Fujiyama Power Systems.
Current domestic cell manufacturing capacity is estimated at approximately 27 gigawatt (Gw), while annual solar demand is expected to remain in the range of nearly 50 Gw over the coming years, alongside a significantly larger module manufacturing ecosystem.
“This phase should be viewed as a natural progression in the evolution of India’s renewable manufacturing landscape, with significant capacity additions and deeper backward integration initiatives already underway across the industry,” said Siddharth Bhatia, MD & CEO, Oyster Renewables.
With substantial manufacturing expansions anticipated by March 2027, the sector is expected to gradually move toward a more balanced and self-sustaining supply environment, he added. As more domestic capacity stabilises and scales up, supply availability should improve and pricing is expected to become more predictable.
A battery of changes
- Net-metering and open-access solar projects must use modules made from cells made locally
- Ministry to consider extensions for projects under implementation
- Developers warn of cost and supply pressures
- Manufacturers say policy certainty is crucial after major investments in capacity expansion
This article has been republished from The Business Standard.