Domestic Solar Cell Manufacturing to Quadruple by 2026: CRISIL

Domestic solar cell manufacturing capacity in India is set to grow more than fourfold, reaching 43-47 GW by June 2026, according to CRISIL Market Intelligence & Analytics.

This expansion is driven by the government’s decision to extend the Approved List of Models and Manufacturers (ALMM) to solar cells starting June 1, 2026. However, CRISIL warns that timely commissioning of announced projects is critical to meet the estimated annual demand of 40-45 GW between FY 2027 and FY 2030.

“While supply of solar cells should be enough based on current market announcements, there could be a transient shortfall till manufacturing ramps up. Also, the prices of Indian solar cells today are 1.5-2.0x more than alternatives from China even after basic customs duty. Such high prices can drive up the capital cost of solar power projects by INR 5-10 million/MW and require tariff increase of 40-50 paise per unit as offset based on current market dynamics," said Sehul Bhatt, Director – Research, CRISIL Market Intelligence & Analytics.

Surbhi Kaushal, Associate Director – Research, CRISIL Market Intelligence & Analytics, added, "Of the installed capacity as of December 2024 owned by 79 entities, only 13 have an integrated cell manufacturing base. The rest will have to decide between expanding capacity or competing for domestic cell supplies. Although 12 non-integrated players have announced plans to install ~32 GW capacity by 2029, the relatively higher capital cost of cell manufacturing plants compared with module assembly lines, and falling prices of the solar value chain could slow things down.”

The Production Linked Incentive (PLI) scheme has facilitated announcements exceeding 55 GW of capacity. CRISIL notes that integrated cell-to-module plants enjoy 2-6 percentage points higher EBITDA margins than module-only units, underscoring the benefits of vertical integration.

While the ALMM extension enhances the domestic solar manufacturing ecosystem, it also highlights challenges related to cost and capacity scaling. The policy is a significant step toward reducing India’s dependency on imports and strengthening its renewable energy landscape.