India's solar cell makers set to capture half the market as import curbs kick in: Crisil Ratings

India's domestic solar cell manufacturers are expected to meet about half of the country's demand this fiscal year, up from roughly a quarter a year ago, according to a report by Crisil Ratings released on Thursday.

The increase follows the government's push to localise the solar photovoltaic supply chain through the Approved List of Cell Manufacturers (ALCM), which mandates the use of domestically manufactured solar cells for a wide range of projects from June 2026.

India's solar cell demand is estimated at 60-65 gigawatts (GW) this fiscal year, with domestic producers expected to supply around half of that requirement, Crisil said. Imports will largely cater to older utility-scale projects that were bid before an August 31, 2025 cut-off date.

"The ALCM will sharply reset India's solar cell supply mix," said Manish Gupta, deputy chief ratings officer at Crisil Ratings.

"The shift will be led by demand for indigenous cells from newer utility-scale bids, net-metering and open-access projects, and government-backed schemes such as KUSUM," Gupta said.

The ALCM framework is aimed at ensuring the use of locally manufactured components and reducing dependence on imported solar cells.

The government last month ruled out any blanket extension of the June 1, 2026 deadline for implementation of the provisions for solar photovoltaic (PV) cells.

The Ministry of New and Renewable Energy (MNRE) said projects commissioned after June 1, 2026 will have to comply with ALMM List-II provisions mandating the use of approved domestic solar PV cells.

However, to protect investments already made, certain renewable energy projects may be granted appropriate time extension on a case-to-case basis.

The rating agency said domestic solar cell manufacturing capacity is expected to nearly double to about 60 GW by the end of the current fiscal year as companies accelerate investments in new facilities and expansion projects.

However, the rapid build-out could pressure utilisation rates and profitability.

"The surge in solar cell capacity will redraw project economics," said Ankit Hakhu, director at Crisil Ratings.

Capacities commissioned by the end of this fiscal year could see payback periods lengthen by one to two years compared with the four to five years achieved by early entrants into solar cell manufacturing, he said.

Early movers benefited from higher pricing premiums and utilisation levels of 50%-60% after stabilisation, advantages that are likely to diminish as more capacity comes online, the report said.

The agency said that companies pursuing deeper backward integration into ingot and wafer manufacturing could earn better returns, particularly if the government's proposed third phase of the Approved List of Models and Manufacturers (ALMM III) takes effect from June 2028.