With ALMM List-II mandating the use of domestically manufactured solar cells, manufacturers in India are navigating several challenges, including a shortage of skilled workers and the slow ramp-up of domestic cell production.

Industry stakeholders expect short-term supply disruptions but believe the mandate will ultimately strengthen domestic manufacturing, deepen supply chain integration, and improve cost competitiveness across the value chain.

In an interview on the sidelines of the Mercom India Renewables Summit 2026, held in New Delhi between July 1 and 2, Harsh Vardhan Govil, Chief Operating Officer of Solar Manufacturing at SAEL, spoke about the mismatch between domestic solar cell and module manufacturing capacity, the likely consolidation of the sector, and the broader challenges associated with India’s ingot and wafer manufacturing mandate.

He also argued that polysilicon manufacturing should qualify for priority sector lending to accelerate the development of a fully integrated domestic solar supply chain.

Edited excerpts from the interview:

Please provide an overview of SAEL and its operations in India

SAEL is a renewable-energy-focused company. We started with waste-to-energy and an independent power production business and entered solar manufacturing over the last two years.  We currently have 4 GW of module manufacturing capacity and are adding 6 GW of cell capacity and 5 GW of additional module capacity.

ALMM List-II mandate has raised concerns about potential supply chain disruptions. How do you expect the situation to play out, and should the mandate have been implemented in phases?

The impact of ALMM List-II has coincided with the effects of the West Asia crisis. Together, they have created a challenging environment for manufacturers and investors.

The implementation timeline was announced well in advance, and the industry was aware of it.

The issue is that there was a perception that it could be managed differently or that the deadline could be extended. This is the stage at which the strongest manufacturers will distinguish themselves.

Manufacturers that integrate across the value chain, adopt advanced technologies, and execute efficiently will be better positioned to succeed. Investors recognize this and will move ahead accordingly.

Do you believe Indian solar cell manufacturers will be able to meet domestic demand under the ALMM List-II framework?

Meeting domestic demand will remain challenging in the near term. Out of India’s existing solar cell manufacturing capacity, almost 15 GW is mono PERC, while TOPCon capacity is around 10 GW. The remaining capacity is based on HJT technology.

As the market shifts toward TOPCon technology, the projects currently under development will mature over the next one or two years. Manufacturing ramp-up also takes time. India’s TOPCon capacity could increase by more than 20 GW next year.

However, adding more capacity than that will take another year.

Until then, the market is likely to face a shortfall. Developers and integrators that can secure supply early are likely to gain an advantage.

India has a significant mismatch between solar module and cell manufacturing capacities. What has caused this imbalance, and is consolidation accelerating within the solar manufacturing industry?

The primary reason behind the capacity imbalance is that cell manufacturing and other upstream activities are more complex and capital-intensive.

Initially, module manufacturing was also complex, but it has now become relatively easier to execute. Module capacity can be increased faster than other upstream segments of the supply chain.

This capacity continued to expand until ALMM requirements came into effect. As you can see, very little new standalone module capacity has been added over the past year. Manufacturers adding capacity are primarily doing so to achieve captive balancing within their supply chains. That largely explains why module manufacturing expanded much faster than upstream capacity.

Industry consolidation appears inevitable. Not every investor will be able to establish these capacities. Even when solar manufacturers pursue backward integration, they must secure the resources and means to quickly establish facilities at a level comparable to the best companies in the industry.

The government has also introduced mandates for ingots and wafers. What would the result of these measures be, and what will be the principal challenges for domestic manufacturers?

The mandate for ingots and wafers involves even more complex manufacturing. It is not because something extraordinary needs to be done within that part of the value chain, but because manufacturing losses are more likely, and every rejected ingot increases production costs.

This loss must either be absorbed or passed on, neither of which is feasible in the Indian market. This creates a cost structure that can become difficult for Indian manufacturers to sustain.

The skills required to operate such a project are also highly specialized.

The waste generated by such projects can also be hazardous and requires a pragmatic approach from both the government and the industry. The industry may require one to two years beyond the 2028 timeline before domestic manufacturing reaches scale.

Given the mismatch between solar cell and module manufacturing capacities and the US Foreign Entity of Concern requirements, does India have the potential to become a major solar manufacturing export hub?

I see significant export potential, primarily because India is viewed as having a credible and sustainable manufacturing ecosystem.

The world considers India a safe manufacturing destination, and product traceability is readily available. For these reasons, the international market will turn to India.

The current supply constraints are temporary.

As domestic solar cell manufacturing stabilizes, India will achieve more competitive cost structures across its products. This will provide a further boost to the market.

Another important point is that Indian manufacturers are increasingly exploring opportunities in international markets as both engineering, procurement, and construction (EPC) contractors and manufacturing partners. If India can offer such integrated EPC and manufacturing solutions to customers worldwide, I believe it will work well.

You have highlighted that ALMM List-II will be critical for domestic manufacturing. Given the expected supply constraints, do you anticipate an increase in solar cell and module prices, and how long could the disruption last?

DCR cell prices have already risen sharply due to the demand-supply imbalance. I expect prices to remain firm until additional domestic manufacturing capacity comes online.

There are also fewer projects mandated to procure DCR-compliant modules. As manufacturing capacities increase, demand is likely to exceed the number of projects in the pipeline. Therefore, cell prices are likely to remain elevated.

Higher cell prices will continue to put pressure on module pricing. Manufacturers will need to optimize bill-of-material costs and improve manufacturing efficiency.

Companies that can achieve this may still be able to generate healthy margins while complying with the ALMM-II requirement.

What are the principal challenges currently facing India’s solar manufacturing sector, and what government support is needed to accelerate capacity expansion?

The government has supported the industry through several measures such as production-linked incentives and customs duties on imports.

However, so far, the industry has not received sufficient support to directly lower manufacturing costs or to help create an effective domestic ecosystem.

The current ecosystem is not providing adequate support because domestic prices remain significantly higher than those offered by Chinese suppliers.

We expect the government to support the development of manufacturing infrastructure in India and support research to improve both equipment and production.

If that happens, India will be better positioned to compete globally. We also need policy decisions covering cells, wafers, and polysilicon.

Polysilicon manufacturing should qualify for priority sector lending. Despite the sector’s rapid growth, solar manufacturing is not always viewed favorably by lenders.

Electricity subsidies would also improve manufacturing competitiveness because power is one of the industry’s largest input costs. These are some of the measures that could support the sector and the country.