ALMM List-II Solar Cell Mandate Explained: How the June 1, 2026 Rules Reshape India's Solar Manufacturing

ALMM — Approved List of Models and Manufacturers: The ALMM is a quality-assurance and import-substitution mechanism issued by the Ministry of New and Renewable Energy (MNRE) under the ALMM Order dated 2 January 2019. It is essentially an official "whitelist." Only solar equipment from manufacturers and models named on this list can be used in a wide range of government-supported and grid-connected solar projects. Its twin purpose is to (a) protect consumers by ensuring only reliable, tested equipment is installed, and (b) promote domestic manufacturing by shutting cheap, low-quality imports out of the protected market.

Two lists under the framework: The 2019 Order envisaged two lists — List-I for solar PV modules (the finished panels) and List-II for solar PV cells (the small wafers inside a module that actually convert sunlight into electricity). For years, only List-I was operational; List-II remained empty.

The List-I module mandate (since 2021): ALMM List-I for modules became mandatory from 10 April 2021. Since then, eligible projects could use any module — but those modules could still be assembled from imported (mainly Chinese) cells. The new rule plugs that gap.

The June 1, 2026 List-II cell mandate: Under the MNRE amendment (Order dated 9 December 2024) and subsequent clarifications, solar projects commissioned on or after 1 June 2026 must use modules from List-I that are themselves built using cells from List-II manufacturers. In short, the localisation requirement now moves one layer deeper — from the panel to the cell inside it. This is sometimes called the Approved List of Cell Manufacturers (ALCM), and it is the key "backward integration" step in India's solar value chain.

Which projects are covered now: As clarified in MNRE's office memorandum of 28 July 2025, the immediate bite of the rule falls on net-metering projects (largely rooftop solar) and Open Access renewable projects commissioned on or after 1 June 2026 — these must use List-II cells.

Net-metering: This is a billing arrangement for small consumers — typically households and small businesses with rooftop solar. The consumer's meter runs both ways: when the rooftop panel generates more electricity than the home uses, the surplus flows back into the grid and the consumer is billed only for the net consumption. Rooftop installations under the flagship PM Surya Ghar: Muft Bijli Yojana are the most prominent net-metering category.

Open Access: This is a provision under the Electricity Act, 2003 that allows large commercial and industrial (C&I) consumers (those with a load above a notified threshold) to buy electricity directly from an independent power producer or developer, rather than from the local distribution company (DISCOM), by paying for use of the transmission/distribution network. Many corporates use Open Access to procure green power directly to meet sustainability goals.

Why these two segments: These are the privately financed, fast-growing rooftop and C&I segments. By bringing them under the cell mandate while giving older, large utility-scale government tenders more transition time, the government is steering the bulk of new private demand toward domestic cells from day one.

DCR — the core concept: The Domestic Content Requirement is a policy tool that makes the use of locally manufactured components mandatory in order to qualify for a government subsidy or to win a government tender. It is a "demand-side" localisation lever — it forces buyers to choose Indian-made goods.

How DCR and ALMM work together: They are complementary. ALMM defines who is an approved domestic supplier; DCR forces certain schemes to buy only from such suppliers. Several flagship schemes already run on strict DCR norms — PM-KUSUM (solar for farmers), PM Surya Ghar (rooftop), and the CPSU Scheme Phase-II (government solar). The June 1, 2026 ALMM List-II rule effectively extends this localisation depth from the module to the cell across a much wider set of projects.

The bigger picture — three layers of protection: India protects its solar manufacturers through (1) tariff barriers — Basic Customs Duty; (2) non-tariff barriers — ALMM and DCR; and (3) production incentives — the PLI scheme. Together they form a comprehensive industrial-policy wall around the sector.

The capacity mismatch: This is the crux. India's solar module manufacturing capacity has surged to roughly 200 GW per annum, but its domestic solar cell manufacturing capacity is far smaller — around 30 GW (government figures cited in Parliament in March 2026 put module capacity near 172 GW and cell capacity around 27 GW). A module factory needs cells as raw material; if the country can produce far more modules than cells, there simply aren't enough domestic cells to go around once imports are blocked.

Integrated vs non-integrated players: A vertically integrated company makes both cells and modules in-house (e.g., large firms with ingot-wafer-cell-module lines). A non-integrated (standalone) module maker only assembles panels and must buy cells from someone else. After June 1, non-integrated makers can no longer import cheap cells; they must buy from the very large integrated firms who are also their competitors in the module market — an uneven playing field.

The margin and pricing squeeze: Because domestic cell supply is scarce, cell makers are reportedly commanding margins of 20–30%, and prices are expected to rise once the mandate bites. Integrated firms may prefer to keep their scarce cells for their own modules, leaving standalone players starved of input. Industry representatives, including the head of the Rajasthan Solar Association, have warned that barring a handful of large integrated players, this could be a survival challenge for a significant section of the industry — raising the risk of market consolidation.

The overcapacity backdrop: The squeeze is sharpened by an existing oversupply. Against solar installations of roughly 45 GW in 2025–26, India's module production capacity is far higher (estimated production capability of ~60–65 GW and total nameplate capacity near 200 GW), and module plants are running at just 30–40% capacity utilisation. Weak export prospects — owing to steep US tariff barriers — have further reduced the outlet for surplus modules, intensifying domestic competition.

The divergent industry view: Not everyone sees a crisis. Several manufacturers view the mandate as a strong, welcome policy signal that finally rewards the heavy investments made in India's solar ecosystem and gives assured demand to domestic cell makers. They argue fears of a cell shortage are overstated.

The key exemption: Large utility-scale projects that were bid out (last date of bid submission) on or before 31 August 2025 are exempted from the List-II cell requirement, even if commissioned after June 1, 2026. Such projects need only use List-I modules. This carve-out removes a huge chunk of immediate demand from the limited domestic cell pool, easing the transition.

List-I(a) — a transitional sub-list: To service these exempt projects, MNRE maintains List-I(a), covering modules that meet ALMM quality norms but do not yet use List-II cells. Non-exempt projects cannot use List-I(a) modules.

Capacity is scaling fast: The first ALMM List-II was published on 31 July 2025 with nine domestic cell manufacturers and a combined capacity of about 13 GW. Driven by the mandate and the PLI scheme, cell capacity is expected to expand sharply (industry estimates project cell capacity rising toward 40–60 GW and beyond as ingot-wafer-cell lines come online).

PLI Scheme for High-Efficiency Solar PV Modules: A "supply-side" measure with an outlay of about ₹24,000 crore, it gives financial incentives to firms that set up gigawatt-scale, fully integrated manufacturing (polysilicon → ingot → wafer → cell → module). It is designed to build the missing upstream capacity — exactly the cell and wafer stages where India is weakest.

Basic Customs Duty (BCD) — the tariff wall: Since 1 April 2022, India levies 40% BCD on imported solar modules and 25% on imported solar cells, making cheap Chinese imports costlier and protecting domestic producers.

ALMM List-III for wafers (coming 2028): MNRE has proposed extending the framework to wafers under a new List-III, with compliance from 1 June 2028 — pushing localisation even further upstream.

The demand schemes: PM Surya Ghar: Muft Bijli Yojana (rooftop), PM-KUSUM (farm solar), and CPSU Phase-II create the assured domestic demand that justifies the manufacturing build-out.

The overarching target: All of this serves India's pledge of 500 GW of non-fossil-fuel-based electricity capacity by 2030 (a commitment flowing from its COP26 "Panchamrit" goals) and the broader Atmanirbhar Bharat vision of self-reliant clean-energy manufacturing.

Launch and scale: Launched in February 2024 by MNRE, it is the world's largest domestic rooftop solar initiative, with an outlay of ₹75,021 crore, targeting 1 crore households by FY 2026–27.

Benefits: It offers up to 300 units of free electricity per month and a Central Financial Assistance subsidy — 60% of system cost for systems up to 2 kW and 40% for the additional capacity between 2–3 kW, capped at around ₹78,000 for a 3 kW system. It also provides collateral-free, low-interest loans.

Why it matters here: Because these rooftop installations operate on net-metering, they fall squarely within the June 1, 2026 cell mandate — making the scheme a key driver of demand for domestically produced cells.

The DISCOM and state dimension: Net-metering connections and commissioning certificates are issued by state-run DISCOMs. Reports note that delays by DISCOMs in inspection and commissioning could cause rooftop projects to miss the pre-June-1 cutoff and lose exemptions — highlighting the cooperative-federalism challenge, since electricity is in the Concurrent List and successful implementation depends on state participation.

The trade-off — protection vs cost: Localisation strengthens energy security and manufacturing jobs but can raise input costs and slow deployment if domestic supply is short — a classic infant-industry protection dilemma. The risk of market consolidation among a few integrated giants is the immediate concern.

The China and US context: India's drive is partly aimed at reducing dependence on Chinese solar imports; simultaneously, steep US tariff barriers have shrunk export markets, leaving Indian makers with surplus capacity at home. This makes domestic demand engineering (via ALMM/DCR) all the more central to the sector's survival.