India's solar story: Cell shortage may be short-lived as capacity set to tripple

India's solar industry is set to experience a significant boost in cell production as capacity is expected to triple, according to industry players. Currently, there are around 32 gigawatts (GW) of domestic solar cell manufacturing capacity in the country, with an expected increase to approximately 100 GW by December 2027. India already possesses over 200 GW of solar module manufacturing capacity, as solar panels are created using solar cells.

The current shortage has been highlighted due to the introduction of the Approved List of Models and Manufacturers for Solar Cells (ALMM List-II) by the government, which specifically targets projects requiring locally made cells.

Vineet Mittal, chairman of Avaada Group, stated that the gap between supply and demand would not persist for an extended period as additional cell-making capacity becomes operational. He emphasized that India's existing module capacity of over 200 GW should not be directly compared to its cell capacity, as module factories may not operate at full capacity and many projects do not necessitate locally made cells.

Mittal also noted that India should not become "Aatmanirbhar" (self-reliant) if critical components continue to be sourced primarily from overseas, as this would expose the industry to external pricing, trade restrictions, and shipping disruptions.

Gyanesh Chaudhary, chairman and managing director of Vikram Solar, highlighted that the ALMM List-II has shifted the industry's focus from merely assembling modules to increasing component manufacturing within the country. Vikram Solar aims to commission 9 GW of domestic solar cell capacity by the end of financial year 2027 (FY27). India's ALMM-listed module manufacturing capacity has already surpassed 217 GW.

Ravi Verma, a member of the Sustainable Projects Developers Association governing council, explained that manufacturing capacity adapts to the certainty of demand, and investors invest when they can see a reliable market for the resulting product. Verma believes that the ALMM has provided module makers with more certainty about demand, and a clear framework for making cells locally could similarly encourage cell manufacturers to enter the market.

However, Avinash Gorakshakar, an analyst, cautioned that the current problem cannot be solely assessed by comparing module and cell manufacturing capacities. He pointed out that not every module factory operates at full capacity, and not all solar projects fall under domestic-content or ALMM cell requirements. According to ICRA, India's solar cell manufacturing capacity could reach around 100 GW by December 2027, with module manufacturing capacity expected to surpass 165 GW by March 2027.

The analyst cautioned that excess module capacity might lead to consolidation among smaller manufacturers.