India’s ALMM-II Drives Cell Shortage Amidst Surging Module Capacity

India’s Approved List of Models and Manufacturers (ALMM-II) framework, set to take effect on June 1, 2026, mandates that government-backed photovoltaic installations utilize domestically produced cells. According to pv magazine, this regulatory shift is expected to intensify demand for Indian-made cell capacity. The policy aims to secure the domestic supply chain by restricting the use of imported cells in state-funded projects.

Currently, the industry faces a structural imbalance. By the end of 2025, 144.8 GW of domestic module manufacturing capacity had been approved. However, the specific cell production capacity required to meet the ALMM-II mandate has not been detailed in the available data. This disparity suggests that module capacity is surging relative to cell availability, potentially creating a shortage as the deadline approaches. The exact impact on supply chains remains a matter of ongoing assessment.

The Capacity Imbalance

The gap between module assembly and cell production has widened into a critical structural bottleneck. As of August 2026, approved module capacity under the first ALMM framework reached 217 GW, while approved cell capacity stood at just 36 GW. This ratio indicates that for every unit of cell output, the industry has built roughly six units of module assembly capability. Such a skewed infrastructure profile leaves module factories dependent on a thin supply of wafers and cells, creating a vulnerability where assembly lines may sit idle if cell inputs do not scale proportionally. The disparity highlights that the domestic value chain remains anchored at the upstream stage, where silicon ingot and wafer processing determine the final energy yield.

Demand projections from InfoLink underscore the urgency of this mismatch. The firm forecasts India’s photovoltaic demand at 43 GW to 49 GW for 2026, rising to 47 GW to 55 GW in 2027. These figures suggest that annual installation targets are likely to outpace the current cell manufacturing base. When module capacity significantly exceeds cell throughput, the constraint shifts from demand to supply. Developers face the risk that even if they secure module contracts, the underlying cell components may not be available in sufficient quantities to meet project timelines. This dynamic pressures the market to prioritize upstream expansion over further assembly line additions, as the availability of cells becomes the limiting factor for grid-scale deployment.

Supply Constraints and Forecasts

• Domestic cell nameplate capacity is projected to surpass 80 GW by the end of 2027.
• India’s domestic cell supply is expected to remain constrained through the majority of 2027.
• By the end of 2025, 23.7 GW of domestic cell capacity had been approved under the ALMM-II framework.

The trajectory of domestic cell production indicates a substantial scaling effort, with nameplate capacity slated to more than triple from the 23.7 GW approved by late 2025 to over 80 GW by late 2027. This expansion reflects a strategic push to align upstream manufacturing with the surging module assembly base. However, the pace of this growth is unlikely to resolve immediate market pressures, as supply constraints are forecast to persist through most of 2027. For developers and project owners, this timeline implies that securing long-term cell supply agreements will be essential to mitigate execution risks during this transitional period.

Market dynamics suggest that even as capacity figures rise, effective availability may lag behind nominal nameplate ratings due to ramp-up periods and quality control hurdles inherent in new manufacturing facilities. The persistence of constraints through 2027 means that the domestic market will likely experience a period of tight supply before reaching equilibrium. Investors and stakeholders should anticipate continued volatility in cell pricing and availability, necessitating careful procurement strategies that account for the gradual maturation of the domestic supply chain rather than immediate abundance.

Policy Evolution and Industry Consolidation

The regulatory framework is set to deepen further with the introduction of ALMM-III, effective June 1, 2028. This next iteration extends domestic sourcing mandates beyond cells to include ingots and wafers. By targeting these upstream silicon processing stages, the policy aims to secure the entire photovoltaic value chain within India’s borders. Such a shift moves the focus from mere assembly and cell production to the foundational material inputs that determine energy yield and cost efficiency. For the industry, this represents a step toward full vertical integration, reducing reliance on imported silicon wafers and insulating domestic manufacturers from global supply chain disruptions.

As these stricter requirements take hold, the module segment is expected to undergo a large-scale capacity shakeout during 2027 and 2028. This consolidation phase typically follows periods of rapid, often subsidized, capacity expansion where many facilities struggle to achieve commercial viability. Plants that cannot secure stable access to the newly mandated domestic ingot and wafer supplies, or that fail to meet updated efficiency benchmarks, may face operational challenges. The shakeout serves to rationalize the market, weeding out inefficient producers and strengthening the competitive position of established manufacturers. For investors, this period suggests a transition from broad-based growth to a more concentrated market structure, where only facilities with robust upstream partnerships and solid financial footing will sustain long-term operations.

What to watch

The immediate horizon centers on the operational maturity of the expanding cell manufacturing base. While nameplate capacity figures climb, the real test lies in whether new facilities can achieve consistent, high-quality output to meet the tight supply window. Stakeholders should monitor the actual ramp-up curves of these plants, as the gap between approved capacity and effective, market-ready supply often widens during initial production phases. The persistence of constraints through the majority of the coming year means that procurement strategies will remain critical for developers seeking to lock in project timelines.

Looking further ahead, the transition to the next regulatory phase in mid-2028 will reshape the competitive landscape. The extension of domestic sourcing mandates to ingots and wafers will likely trigger a significant consolidation of the module segment. Facilities that fail to secure stable access to these upstream materials or meet updated efficiency standards may struggle to maintain viability. Investors should track which manufacturers establish robust vertical partnerships and which facilities face operational challenges during this shakeout. The shift from broad-based capacity growth to a more concentrated market structure will define the long-term stability of the domestic solar supply chain.