India's domestic solar cell manufacturing capacity is projected to increase over four times, reaching between 43-47 GW by June 2026. This growth is fueled by the government's choice to widen the Approved List of Models and Manufacturers (ALMM) to include solar cells beginning June 1, 2026. Nonetheless, CRISIL cautions that the on-time launch of declared projects is essential to satisfy the projected yearly demand of 40-45 GW from FY 2027 to FY 2030.

“While supply of solar cells should be enough based on current market announcements, there could be a transient shortfall till manufacturing ramps up. Also, the prices of Indian solar cells today are 1.5-2.0x more than alternatives from China even after basic customs duty. Such high prices can drive up the capital cost of solar power projects by INR 5-10 million/MW and require tariff increase of 40-50 paise per unit as offset based on current market dynamics," said Sehul Bhatt, Director – Research, CRISIL Market Intelligence & Analytics.

Surbhi Kaushal, Associate Director – Research, CRISIL Market Intelligence & Analytics, added, "Of the installed capacity as of December 2024 owned by 79 entities, only 13 have an integrated cell manufacturing base. The rest will have to decide between expanding capacity or competing for domestic cell supplies. Although 12 non-integrated players have announced plans to install ~32 GW capacity by 2029, the relatively higher capital cost of cell manufacturing plants compared with module assembly lines, and falling prices of the solar value chain could slow things down.”

The Production Linked Incentive (PLI) program has enabled declarations surpassing 55 GW of capacity. CRISIL observes that integrated cell-to-module facilities achieve EBITDA margins that are 2-6 percentage points greater than those of module-only plants, highlighting the advantages of vertical integration.