ALMM Drives Solar Cell Production Surge, Challenges Ahead for Module Market in India: ICRA

An analysis by ICRA, an Independent Credit Rating Agency, shows that the implementation of ALMM for solar PV cells from June 2026 has fast tracked the expansion of cell manufacturing capacity in India. However, this also is likely to raise cost issues for domestic solar modules.

The cost of domestic modules using cells from domestic OEMs is likely to exceed the cost of modules using imported cells by 3-4 cents/watt, ICRA said.

Module Production Higher than Cells

While a boost to domestic cell manufacturing is a positive move for solar OEMs, the annual solar module production is expected to be higher than the projected annual solar capacity installation of 45-50 gigawatt direct current (GWdc).

This is in addition to the direct impact of the recent imposition of US tariffs. It has  redirected modules from the export market to the domestic market. As per the estimates, 

Hence, the overcapacity in module production will likely lead to consolidation of smaller module players. On the other hand, the vertically integrated manufacturers will benefit over the long term due to greater control over the supply chain. 

Current Statistics

The report also notes that the solar photovoltaic (PV) module manufacturing capacity in India has increased over 5 times in last 3 years - 109 GW as on September 2025 from less than 20 GW in 2022. 

Source: ICRA Research, MNRE

This, ICRA notes, is a direct impact of the strong policy support in the form of approved list of models and manufacturers (ALMM), which effectively barred the direct import of modules.

By the end of next financial year, that is by March 2027, the module manufacturing capacity in India is likely to cross 165 GW, led by the capacity expansion plans of leading original equipment manufacturers (OEMs). Notably, the cell manufacturing capacity is likely to increase to 100 GW by December 2027.

China's 90% Share 

The solar PV module supply chain is dominated by China. The Central Asian country has over 90 percent share in global manufacturing capacity across polysilicon and wafer, over 85 percent share in cell and around 80 percent share in modules. 

The global module manufacturing capacity is estimated to rise to over 1,400 GW in 2025 from about 600 GW in 2022, leading to an oversupply in the market and low module prices. This in turn has negatively affected the Chinese, lowering the profitability of China's leading OEMs. A sustained period of low profits could lead to a consolidation in the industry, ICRA noted.