India’s Solar Cell Capacity to Surge to 43-47 GW by June 2026 Amid Rising Demand

The Indian government’s decision to extend the Approved Lists of Models and Manufacturers (ALMM) to solar cells starting June 1, 2026, is expected to significantly accelerate domestic solar cell manufacturing. According to CRISIL Market Intelligence & Analytics, India’s solar cell production capacity is projected to surge from 10 GW in March 2024 to 43-47 GW by mid-2026 — a more than fourfold increase.

However, this growth comes with challenges. India’s average annual solar cell demand is expected to range between 40-45 GW from fiscal years 2027 to 2030. This makes timely project implementation crucial to avoid capacity shortages, factoring in typical utilization rates and potential industry disruptions.

Pricing remains a critical concern. Indian-made solar cells currently cost 1.5-2.0 times more than Chinese alternatives, even after basic customs duties. “Such high prices could raise solar project capital costs by Rs 5-10 million per MW and necessitate tariff increases of 40-50 paise per unit,” said Sehul Bhatt, Director — Research, CRISIL Market Intelligence & Analytics.

Additionally, non-integrated manufacturers could face compliance issues. Only 13 of India’s 79 solar power producers, owning 62 GW of installed capacity as of December 2024, have integrated solar cell production facilities. The rest may need to expand their manufacturing capabilities or compete for limited domestic supplies. Surbhi Kaushal, Associate Director — Research at CRISIL, noted that while 12 non-integrated companies have announced plans to add 32 GW of capacity by 2029, high capital costs for setting up cell plants could delay expansions.

Encouragingly, over 55 GW of manufacturing capacity has been announced under the Production Linked Incentive (PLI) scheme and related initiatives. Integrated plants combining cell and module production have historically enjoyed 2-6 percentage points better EBITDA margins compared to standalone module units.

The ALMM extension is also expected to shield Indian manufacturers from global supply disruptions and boost exports. The US market, for instance, continues to produce solar modules at prices 30-35% higher due to limited upstream component availability, presenting an export opportunity for India.