India's Solar Shift: Domestic Cells Now Mandatory

India's solar manufacturing sector is undergoing a significant shift following the implementation of the second Approved List of Models and Manufacturers (ALMM List-II) policy, effective June 1, 2026. This directive mandates that all major solar projects must procure solar cells exclusively from domestically approved suppliers.

The policy is anticipated to catalyze industry consolidation, particularly given the substantial gap between India's module manufacturing capacity and its domestic cell production capabilities. While over 120 module manufacturers exist, only 13 are approved cell producers, with total domestic cell capacity at approximately 30 GW against over 210 GW of module capacity.

JM Financial predicts that companies with integrated operations, spanning from cell to module production, will gain a competitive advantage. They anticipate a rise in cell manufacturing capacity to 60-70 GW by FY28, though weaker players may exit the market as policy support increasingly favors backward integration.

Emmvee is identified as a preferred stock due to its experienced TOPCon cell manufacturing and high integration levels. Premier Energies and Waaree Energies have also been upgraded, recognized for their strong backward integration and cell-to-module efficiencies. Vikram Solar, however, faces execution risks under the new regime due to its lack of in-house cell manufacturing.

The government's adherence to the ALMM List-II timeline suggests a continued push for domestic sourcing, with potential future lists (ALMM List-III) extending requirements to ingots and wafers by June 2028. This strategic policy is expected to reshape India's solar industry into a more consolidated, oligopolistic market.