Solar Resilience: The Indian Model | Evaluating ALMM And PLI Frameworks

Policy Update
Anushree Khare

Background 

Before the concept of “solar energy” became a focus of governmental policies, sunlight was viewed as currency. Calendars were designed around the position of the sun. Temples were constructed facing the sun and economies would wait for seasonal changes in sunlight. While the physical properties of the sun have remained unchanged. It is the mechanism developed by humans to collect sunlight, and whether or not those mechanisms are owned domestically has changed.

India has chosen to pursue an ambitious goal:

• To increase its usage of solar power, while also producing domestically the majority of equipment needed to produce solar power. 

In essence, India wants to build factories capable of producing the equipment necessary for solar panels (i.e. solar cells and modules), rather than rely on foreign manufactured goods (mostly coming from China). This goal is much easier said than done. Simply wanting a domestic manufacturing base does not equate to having one. The journey involves many years of developing factories, securing financing, etc.

In order to create a domestic solar manufacturing base, the Indian Government created two tools that worked hand-in-hand to achieve the desired goal. One tool controls purchasing behaviour permitting only equipment from domestic manufacturers that meet government-established criteria for use in solar projects involving the Indian Government. The second tool provides financial incentive for companies wishing to establish manufacturing operations within India essentially providing billions of rupees in support of the creation of new industries.

The two tools taken together were intended to convert government ambitions into actual production capacity and this article tests whether or not that goal has been achieved.

Functioning 

India’s government has put two key programs into place in order to develop a domestic solar panel manufacturing base: 

• The Production Linked Incentive (PLI) program 
• Approved List of Models and Manufacturers (ALMM)

The PLI program works as a type of financing incentive, providing money to businesses so they may construct new production facilities. The initiative is based on a larger goal of achieving ‘Atmanirbhar Bharat’ (Self-reliant India), which has two main goals: 

• Promoting increased domestic competition through investment in advanced technologies.
• Increasing significantly new investment in high-tech areas for the benefit of Indian industry. 

Government funding was allocated for an amount of ₹24,000 crores. It has been split into two phases:

• Tranche I offered ₹4,500 crores to three firms
• Tranche II, a far greater amount with an award of over ₹14,000 crores to eleven firms to entice them to produce every component of solar panels from polysilicon through to the finished product.

Table 1: Manufacturing Baskets under PLI Tranche-II

While the PLI program develops the production facilities, the ALMM serves as a regulatory guide to be followed by solar buyers and project buyers. The ALMM stipulates that many government-supported solar projects, as well as net-metering and open-access projects, must purchase all necessary equipment produced domestically and listed under the ALMM. The ALMM is structured into multiple lists corresponding to each part produced. 

• List-I includes the entire solar module (panel) and has expanded dramatically since its introduction, listing over 217,000 megawatts of total manufacturing capacity.  
• List-II includes solar cells, the individual components that make up the full module. 

As of now, List-II represents only about 31,758 MW of combined total capacity among fourteen firms. The government established List-II to ensure that not only the assembly of the final module is done in India, but also that the critical internal cells used in the modules are manufactured in India and not sourced internationally.  

Ideally, both programs should function in tandem. The PLI program provides funding for businesses to establish modern production facilities capable of producing complete products including raw materials. The ALMM ensures there will be a buyer base available for these newly constructed plants to sell their products to by requiring that all products sold on regulated projects meet ALMM standards. In doing so, the ALMM establishes a safe environment for domestic producers funded by the PLI to sell their solar-related products. Thus, helping to lead India toward independence in renewable energy technology.

Performance

The policies of the Production Linked Incentive (PLI) and Approved List of Models & Manufacturers (ALMM) have dramatically changed how India manufactures clean energy. 

• According to ALMM List-I, the domestic assembly of complete solar modules has increased significantly, with approval to manufacture over 217,000 megawatts (MW). 
• In contrast, the production of internal solar cells, governed by List-II, has been slower, at approximately 31,758 MW produced across 14 manufacturers.

The difference in these two areas of the value chain comes down to differences in the capital and technology needed for each area. 

Historically module assembly has been a much lower CAPEX downstream process which can be set up quickly with foreign made materials. The production of solar cells requires very sophisticated semiconductor manufacturing equipment, and a clean room environment. 

Solar cell manufacturers require high levels of capital expenditures and take a great deal of time to commission new facilities. This leads to large lags in adding new capacity to the upper stream part of the solar value chain.

This has resulted in a significant supply gap, as there is roughly six to seven times more manufacturing capability available to assemble modules than there is to produce the cells required within those modules. The theoretical mismatch in the number of committed capacities has taken place. 

Figure1: Compiled by the author based on Ministry of New and Renewable Energy (MNRE) and National Institute of Solar Energy (NISE) portal data.

However, as no solar projects under the Solar PLI have produced commercially for a whole year (a required condition to be eligible to receive funds), direct fiscal disbursements are progressing. Thus, almost all of India’s silicon wafer supply is imported from abroad (98%) as well as 100% of its polysilicon supplies.

The PLI program has been successful in attracting over ₹93,000 crore in committed investments into the construction of fully integrated facilities. However, the domestic production of raw materials associated with the initial upstream stages remains relatively underdeveloped.

These differences in manufacturing capabilities have had direct implications for various solar power customers. Utility-scale solar developers faced rapid and unforeseen compliance pressures and potential delays due to the enforcement of List-II cell requirements leading up to the June 2026 deadline. 

As a result, many of these developers utilized case-by-case milestone relief mechanisms or invoked force majeure provisions under Department of Expenditure guidelines to protect their investments. 

Similar impacts were realized by commercial and industrial solar installations. However, the Indian government delayed the mandatory domestic cell requirement for open-access and net-metering projects until December 31, 2026 (O.M. 283/53/2026). Residential rooftop solar programs such as PM Surya Ghar have successfully transitioned to an entirely domestically sourced product. (MNRE, 2026)

Ultimately, the performance of these policy initiatives illustrates the challenges inherent in developing a completely domestic supply chain while continuing to pursue India’s broader renewable energy goals. Regulators demonstrated appropriate operational flexibility by providing targeted forms of relief and adjusting implementation timelines to support developers.

By providing this additional time for current projects to be completed without penalty, and continuing to guide the development of the overall industry toward a long-term dependency upon equipment made in India, regulators can help ensure both short- and long-term objectives are achieved.

Emerging Issue

Capacity synchronization within modules and cells

Module manufacturing under ALMM List-I has reached significant economies-of-scale and was able to register over 217,000 MW in manufacturing capacity. Cell manufacture under List-II is increasing. However, it has registered only about 31,758 MW across 14 manufacturers. Maintaining the balance of capacity between these two will be one of the primary challenges facing the industry by the time ALMM List-II cell-sourcing compliance becomes mandatory for net-metered and open-access generation projects on 31 December 2026.  

Increasing depth into the upstream supply chain

Downstream assembly has been developing rapidly domestically, but domestic manufacturing upstream in the supply chain including polysilicon refining using silicon grown in a photovoltaic grade process and producing ingots of silicon for subsequent wafer slicing is being set up pursuant to commitments made by manufacturers under PLI Tranche-II. A comprehensive domestic upstream manufacturing capability provides the solar industry with the ability to produce complete products from start to finish domestically. 

In addition to providing protection against international supply chain disruptions, foreign export tariffs and pricing volatility in imported commodities associated with global PV supply chains. This also provides manufacturers with increased security in their ability to source necessary raw material and component supplies as well as provide a competitive advantage to domestic consumers.

Technological advancements and standards: A technological revolution is occurring in the photovoltaic industry globally. Traditional P-type PERC architecture-based photovoltaic panels are giving way to newer, more efficient technologies such as N-type TOPCon and Heterojunction Technology (HJT). Manufacturers who have invested significant amounts of capital to expand their manufacturing capacity need to continue investing in new capital to update their existing production lines to utilize these new technologies or they will no longer remain competitive in the future.  

Phased regulatory framework and capital protection: Regulators are attempting to allow the domestic production base to grow as quickly as possible while still allowing developers sufficient time to execute projects. One of the ways regulators have accomplished this is through providing operational flexibility in implementing policies. 

Examples include: 

• Force majeure provisions implemented by the Department of Expenditure 
• Milestone-based investment protection criteria established by the Ministry of New and Renewable Energy (MNRE) 

A transition date of 31 December 2026 for net-metered and open-access segments (O.M. 283/53/2026) to provide protection for capital already committed while guiding the broader market towards compliance with requirements related to domestic sourcing.

Industry Consolidation & Enterprise Adaptation: Under the PLI structure, the high barrier to entry through both vertical integration requirements (to achieve economies of scale) and a minimum capital threshold will hinder smaller enterprise’s ability to independently compete; As such, module assembly businesses in the 200-500MW size range are likely to experience increased competitive pressure in their operations.

WTO Legal Challenge (Case WT/DS644): Late in 2025, China initiated a formal consultation case with the World Trade Organization against India regarding its “domestic content” provisions and solar subsidies provided through the PLI and the Approved List of Models and Manufacturers (ALMM), introducing an additional layer of complexity regarding international trade compliance and multilateral alignment.

Way Forward

To transform the temporary capability of being resilient in the face of crisis into sustainable self-reliance without jeopardizing India’s goal of a total of 500 GW of renewable energy generation by the year 2030, implementation of policies regarding this matter will have to give priority to four key areas:  

1. Increasing Speed at Which NISE Cells Are Certified

Whether or not the National Institute of Solar Energy (NISE) successfully expands List II capacity as quickly as possible is likely to be the single most important factor that determines the success of all future policies prior to the December 2026 deadline. As approximately 1,687 MW was added in the July 2026 revision, the testing turnaround time for each facility and pipeline for auditing factories must also be decreased to bring down the difference in size between modules and cells.  

2. Consistent Timelines for Adjudicating Requests for Investment Relief and Transparency

The case-by-case review process currently being conducted by MNRE on investment requests evaluating 75% possession of land, financial closure, connectivity approval, and physical delivery of more than 50% of modules must be carried out within a consistent timeline. If transparent adjudications are made using the Department of Expenditure’s Force Majeure provisions, it will ensure that the investments made will not become stranded assets without damaging the government’s reputation for credible regulation.  

3. Supporting Raw Material Refining and Upgrading Technologies Used in Upstream Production Processes

Each subsequent phase of supporting industry should focus on enhancing upstream processes such as: 

• Supporting the direct refinements of polysilicon
• Directly funding the pulling of silicon ingots. 
• Funding the slicing of silicon wafers. 
• Providing targeted transitional assistance in the form of grants to domestic manufacturing companies to assist them in transitioning their equipment and production line from P-Type PERC technology to N-Type Topcon Technology, Heterojunction Technology (HJT) and Perovskite Tandem Technology. 

This will allow the Indian solar industry to remain technologically competitive into the future, prevent the premature obsolescence of existing assets and reduce risk associated with the capital expenditures needed to upgrade the production capacity at legacy manufacturing plants.

4. Coordinating Development of Infrastructure and Circularity

Grid Factory Synchronization: Synchronize SECI and State Transmission Grid Rollout with Commercial Operation Dates (COD) of PLI Manufacturing Plants to avoid having production lines go idle due to lack of grid connection. Circular PV Framework:

• Formalize End-of-Life Module Recycling Guidelines into ALMM Mandate to provide Secondary Domestic Recovery for High Value Silver, Silicon and Glass.

References

Department of Expenditure. (2026). Treatment of force majeure and supply chain disruptions under public procurement contracts (Office Memorandum No. 1/3/2026-PPD). Ministry of Finance, Government of India. https://doe.gov.in

Harvard Kennedy School. (2023). Industrial policy for clean energy transitions: Designing resilient supply chains. Belfer Center for Science and International Affairs, Harvard University. https://www.hks.harvard.edu

Ministry of New and Renewable Energy. (2022). Scheme guidelines for National Programme on High Efficiency Solar PV Modules (PLI Scheme Tranche-II). Government of India. https://mnre.gov.in

Ministry of New and Renewable Energy. (2026). No blanket extension of Approved List of Models and Manufacturers (ALMM) List-II beyond 1st June 2026 subject to protection of investments already made (Office Memorandum No. 283/63/2025-GRID SOLAR). Government of India. https://mnre.gov.in/en/notice/almm-no-blanket-extension-of-almm-list-ii-beyond-01-06-2026-subject-to-protection-of-investments-already-made/

Ministry of New and Renewable Energy. (2026). Limited Exemption from ALMM List-II for Net-Metering and Open Access Projects till 31st December 2026 (Office Memorandum No. 283/53/2026-GRID SOLAR). Government of India. https://mnre.gov.in/en/notice/almm-no-blanket-extension-of-almm-list-ii-beyond-01-06-2026-subject-to-protection-of-investments-already-made/

National Institute of Solar Energy. (2026). Approved List of Models and Manufacturers (ALMM) portal and testing guidelines. Ministry of New and Renewable Energy, Government of India. https://nise.res.in

Press Information Bureau. (2026). No blanket extension of Approved List of Models and Manufacturers (ALMM) List-II beyond 1st June 2026. Ministry of New and Renewable Energy, Government of India. https://pib.gov.in

Solar Energy Corporation of India. (2023). Selection of solar PV module manufacturers for setting up manufacturing capacities under PLI scheme (Tranche-II). Government of India. https://seci.co.in

Yale School of the Environment. (2022). Geopolitics of critical minerals and clean technology supply chains. Yale University. https://environment.yale.edu

About The Contributor

Anushree Khare is a Research & Editorial Intern at the Impact and Policy Research Institute (IMPRI). She holds a B.A (Hons) degree in Economics with Research. Her academic and professional interests lie in the domains of finance, quantitative research, data-driven policy analysis, and business strategy.

Acknowledgement

The author extends sincere gratitude to the IMPRI team for their guidance and support along with the reviewers  Ms. Gargi Bisht and Ms. Nivedya Murali for their valuable feedback and insights.

Disclaimer

All views expressed in the article belong solely to the author and not necessarily to the organization

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