With the global demand for renewable energy continuously growing, India’s traditional reliance on Chinese-made batteries for assembling PV modules is undergoing profound changes. The Indian government has recently unveiled a new mission to boost domestic solar cell capacity, anticipating a significant leap to over 80GW by 2026, accounting for nearly 50% of the projected 172GW module capacity in operation.
As of June 2024, India’s solar cell capacity stood at just 7.6GW, less than 10% of its 77.2GW module capacity. However, according to forecasts by market research firm Mercom India, India’s solar cell capacity is poised for explosive growth in the coming years. The primary driver of this transformation is the reintroduction of the Approved List of Models and Manufacturers (ALMM) by the Indian government in April this year, which mandates the procurement of modules only from domestic manufacturers, thereby fueling the rapid development of local manufacturers.
Raj Prabhu, CEO of Mercom Capital Group, stated that the reintroduction of ALMM presents market opportunities for Indian manufacturers. Although they cannot compete directly with Chinese manufacturers on cost, with imported products shut out, Indian manufacturers now have their own market. However, he also noted that Indian manufacturers need to improve product quality, especially for batteries and modules from smaller manufacturers, as quality issues remain a major concern for developers.
Beyond ALMM, the Indian government has also introduced a capacity-linked incentive scheme to further increase the utilization of domestically produced solar cells. Additionally, the Ministry of New and Renewable Energy has proposed expanding the scope of ALMM to include solar cells, requiring manufacturers to procure cells only from listed suppliers by 2026, thereby further boosting the domestic solar cell industry.
In competing with China, Indian manufacturers face significant challenges. China dominates the global market with its low-cost and high-quality solar products, largely due to substantial government subsidies. Despite a series of measures by the Indian government to promote domestic manufacturing, matching China’s production levels in a short period remains a formidable task.
According to Mercom’s latest report, India has traditionally been a strong exporter of PV products to the US, accounting for over 97% of India’s module exports. As the US boosts its solar capacity, Indian manufacturers are expected to gain more opportunities in the US market. In particular, the stance of the incoming US administration may impact entities supported by China in Southeast Asia, creating new opportunities for Indian manufacturers.
Furthermore, a report by ValueQuest Investment also points out that India has advantages over Southeast Asia and Mexico, including large-scale manufacturing bases, STEM talent, and competitive costs. These advantages make India a potential replacement for Southeast Asia as the primary exporter of solar PV to the US.
