India is set to commission more solar capacity in 2026 than in any year in its installation history, even as the policy driving that surge simultaneously creates a supply crunch that will push system prices significantly higher, according to new analysis from Wood Mackenzie.
India added 34 GWdc of solar capacity in the first half of 2026, 38% above H1 2025 levels, as developers raced to commission projects ahead of the June deadline for the Approved List of Models and Manufacturers-II (ALMM-II). Full-year additions are forecast to exceed 50 GWdc, surpassing the previous record of 49 GWdc set in 2025, according to Wood Mackenzie’s ‘From Modules to Cells: India Deepens its Solar PV Push’ report.
“India’s ALMM-II mandate is a bold step toward building a fully integrated domestic solar supply chain, but cell manufacturing capacity has simply not kept pace with modules,” said Sureet Singh, Research Analyst, Wood Mackenzie. “The near-term cost impact is unavoidable, and developers will need to navigate a difficult transition period before prices stabilise.”
Manufacturing capacity of solar modules and cells in India
Installations surge ahead of ALMM-II deadline, but slowdown follows
The 34 GWdc added in H1 2026 reflects a concentrated push by developers to complete projects before ALMM-II took effect, requiring the use of modules produced from domestically manufactured cells in government-supported projects. The accelerated build-out was further driven by the phased removal of waivers for inter-state transmission charges, which fell from 75% to 50% for projects commissioned from July 2026 onwards and are set to be phased out entirely after July 2028.
Momentum is expected to slow in H2 2026 as cell capacity constraints and rising module prices weigh on project development. However, ALMM-II waivers granted for net metering and open access projects until 31 December 2026 could provide upside to that figure. The MNRE also agreed in July 2026 to waive the mandate for projects approaching completion, requiring applicants to have submitted applications by 23 July 2026.
Import dependency shifts rather than disappears
While ALMM-II has reduced India’s direct cell imports from China, sourcing has pivoted toward Southeast Asia, with Indonesian cell imports nearly tripling in early 2026. In the first five months of 2026, India imported 5 GW of wafers and 20 GW of cells, with wafer imports climbing 86% year-on-year to support domestic cell production. India has imposed a 20% basic customs duty on imported cells and modules, and in September 2025 the DGTR recommended additional anti-dumping duties of up to 30% on Chinese-origin solar cells and modules, pending a final decision from Central Government, making Indonesian-origin supply an increasingly attractive alternative, though circumvention scrutiny may follow given the pattern of Chinese cell rerouting observed in other markets.
Any delay to the 14 GW of new cell manufacturing capacity currently under construction risks deepening import reliance and driving prices beyond current estimates. 130 GW of additional cell capacity is expected to come online by 2029, requiring a compound annual growth rate of 49% from the 2026 full-build baseline of 88 GW.
Prices to remain elevated through 2027
Even as new cell capacity comes online, Wood Mackenzie expects insufficient utilisation to keep supply short of demand in 2027. Cell production is projected to reach 29 GW next year, still falling 21 GW short of the average annual module demand of 50 GW. As a result, system prices are forecast to decline by just 3% between Q4 2026 and Q4 2027.
“Prices are expected to stabilise through 2029 as additional cell capacity comes online, but the transition will require policy consistency and timely execution by manufacturers,” said Mathew Thomas, Research Analyst, Wood Mackenzie. “The rollout of ALMM-II may follow ALMM-I’s pattern of multiple exemptions, though the impact should be more contained given greater preparedness among suppliers, developers and policymakers. The MNRE’s plan to implement ALMM-III in June 2028, extending the mandate to solar wafers, signals that India’s domestic content ambitions are far from complete.”
