India’s solar power industry is entering a new phase of transformation following the implementation of mandatory domestic solar cell requirements, a move that is expected to accelerate industry consolidation and strengthen the position of large integrated manufacturers, according to a report by JM Financial.
The new regulation, introduced under ALMM List-II, came into effect on June 1, 2026. Under the rule, all solar projects commissioned through Net-Metering and Open Access must use solar photovoltaic (PV) modules listed under ALMM List-I and solar PV cells approved under ALMM List-II, ANI reported.
The report notes that India currently has more than 120 solar module manufacturers with a combined installed module manufacturing capacity exceeding 210 GW. Of this, 173 GW is already included under ALMM List-I.
Industry participants can broadly be divided into three categories: large integrated manufacturers with significant growth potential, technologically advanced domestic companies, and smaller assemblers that largely depend on import duties and policy protection measures for their survival.
While module manufacturing capacity has expanded rapidly, solar cell production remains relatively limited. India currently has around 30 GW of solar cell manufacturing capacity spread across 13 approved manufacturers. This capacity is projected to increase to 60-70 GW by FY28, supported by investments from an estimated 10 to 15 companies.
The next phase of the government’s localisation push is also taking shape. ALMM List-III, which aims to extend domestic sourcing requirements to solar ingots and wafers, is presently under consultation and is proposed to be implemented from June 2028.
JM Financial said the government’s decision to proceed with ALMM List-II despite strong industry demands for a blanket deferment indicates a firm policy commitment. The report expects ALMM List-III to be rolled out as scheduled, further strengthening domestic manufacturing across the solar value chain.
India’s solar sector has witnessed rapid growth in recent years. During FY26, the country added 44.6 GW of solar power capacity, including 15 GW from commercial and industrial consumers as well as captive power projects. This marked a significant increase from the 10 GW installed in the same segment during FY25.
By March 2026, cumulative installed solar open-access capacity had reached 32.9 GW, highlighting rising demand from industrial and commercial consumers seeking renewable energy solutions.
Data from the Central Electricity Authority (CEA) shows that 138 GW of renewable energy capacity was under construction at the end of March 2026. This includes 90 GW of solar projects, 29 GW of wind projects and 19 GW of hybrid projects.
According to the report, between 10 GW and 15 GW of solar open-access projects currently under construction may qualify for regulatory relaxations, but the impact on opportunities for integrated solar cell and module manufacturers is expected to be limited.
As policy support increasingly favours companies with manufacturing depth and technological capabilities, JM Financial believes the sector will gradually witness the exit of weaker players and a growing concentration of market share among a smaller group of large manufacturers, paving the way for an oligopolistic industry structure in the coming years.
