India's solar push hits a manufacturing hurdle. Here's why the cell mandate was delayed

India’s solar ambitions now face the manufacturing test, with the government-backed net-metering and open access solar projects exempt from mandatory domestic cell sourcing until December 31, 2026.

The majority of solar cells are imported from China.

The Approved List of Models & Manufacturers (ALMM) List-II mandate requires all government-backed, net-metered and open-access solar projects commissioned on or after June 1, 2026, to use solar panels manufactured exclusively with domestically produced solar cells.

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Manufacturing crunch

The decision reflects the gap in domestic solar cell manufacturing and the requirement by project developers as part of India’s solar targets. Manufacturers have flagged that domestic solar cell capacity, at about 31GW, is far below the module manufacturing capacity of around 193GW.

The mismatch is sharper in advanced and highly efficient solar technology, TOPCon, where approved module capacity is nearly 172GW but domestic cell capacity is only around 10GW.

The Ministry of New and Renewable Energy (MNRE) on Saturday extended it till the end of this year. It further said there will be no change in the policy for solar PV cells, and no blanket extension in the applicability of ALMM List-II for solar power projects will be provided.  

In a letter to MNRE on May 26, 2026, Contendre Greenergy Ltd, a solar panel manufacturer in India, said the current structure and timeline could lead to unintended industry-wide consequences. The company highlighted what it described as a significant structural mismatch between module manufacturing capacity and domestic cell availability.

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Investment risk

Contendre said in its letter that the mismatch is not merely a supply constraint but a broader operational challenge. The shortage of domestically available TOPCon cells could force module manufacturers to modify production lines to accommodate alternate cell technologies, undertake fresh product certifications and manage operational disruptions that may reduce manufacturing efficiency during the transition.

These adjustments would also entail additional capital expenditure and project delays, placing further financial strain on manufacturers already grappling with tight margins and significant debt obligations.

According to industry players, module manufacturers had invested under the prevailing policy framework and now face the risk of being unable to source compliant domestic cells. The company argued that backward integration into cell manufacturing is not a practical solution for most standalone players.

The government said that the extension will also help the standalone solar PV module manufacturers by providing them protection of investments already made, in the form of inventories, through additional demand creation.

This will also provide them sufficient time before they can effectively increase their sourcing of solar cells from ALMM List-II-listed solar cell manufacturers, as the solar cell capacity in ALMM List-II continues to rise steadily.

Huge cost

A 1 GW solar cell manufacturing facility requires an investment of Rs 250 crore to Rs 400 crore — roughly five to eight times higher than module manufacturing, said the company. Cell manufacturing projects also involve gestation periods of 18 to 24 months and require specialised semiconductor-grade manufacturing expertise.

The company warned that standalone manufacturers would face “double financial jeopardy” by servicing existing debt while attempting to raise capital for cell manufacturing facilities. The decision is a result of detailed deliberations with various stakeholders of the solar industry.