India is on track to commission more than 50 GW of solar capacity in 2026, exceeding any previous year in the nation's installation history, according to new analysis from Wood Mackenzie published in its report "From Modules to Cells: India Deepens its Solar PV Push." But the same policy driving that record-breaking surge is simultaneously creating a supply shortage that will drive system prices significantly higher through next year. The nation's push to build a fully integrated domestic solar manufacturing chain is reshaping the industry, though the transition comes with unavoidable near-term costs.
The country installed 34 GW of solar capacity in the first half of 2026, a 38% jump compared to the same period in 2025, as developers rushed to finish projects before the June deadline for the Approved List of Models and Manufacturers-II (ALMM-II) took effect. The full-year forecast of over 50 GW would surpass the previous record of 49 GW set in 2025. In the first five months of 2026, the nation brought in 5 GW of wafers and 20 GW of cells, with wafer imports climbing 86% year-over-year to support domestic cell production. While ALMM-II has cut direct cell imports from China, sourcing has pivoted toward Southeast Asia, with Indonesian cell imports nearly tripling in early 2026. India has a 20% basic customs duty on imported cells and modules, and in September 2025 the Directorate General of Trade Remedies recommended additional anti-dumping duties of up to 30% on Chinese-origin solar cells and modules, pending a final government decision.
"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 at Wood Mackenzie. The accelerated build-out in the first half of 2026 was also driven by the phased removal of waivers for inter-state transmission charges, which dropped from 75% to 50% for projects commissioned from July 2026 onwards and are scheduled to be eliminated entirely after July 2028. According to the report, 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.
The mismatch between cell production and module demand explains why prices will stay elevated well into next year. The ALMM-II requirement mandates that government-supported projects use modules produced from domestically manufactured cells, but cell manufacturing capacity hasn't kept up with module production. Cell production is projected to reach 29 GW next year, 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 the fourth quarter of 2026 and the fourth quarter of 2027. Momentum is expected to slow in the second half of 2026 as cell capacity constraints and rising module prices weigh on project development, though ALMM-II waivers granted for net metering and open access projects until December 31, 2026 could boost that figure. The Ministry of New and Renewable Energy also agreed in July 2026 to waive the mandate for projects approaching completion, requiring applicants to have submitted applications by July 23, 2026.
Prices are expected to stabilize through 2029 as additional cell capacity comes online, according to Mathew Thomas, Research Analyst at Wood Mackenzie, but the transition will require policy consistency and timely execution by manufacturers. The report notes that any delay to the 14 GW of new cell manufacturing capacity currently under construction risks deepening import reliance and driving prices beyond current estimates. 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 Ministry'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.