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⚠ ALMM Exemption Window Narrows (Sept 2026)
India's Solar PLI: Domestic Module Manufacturing, Carbon Implications, and What It Means for Industrial RE Procurement
India's PLI scheme for solar has created committed manufacturing capacity of approximately 48.3 GW across its tranches, scaling robustly. With the MNRE formally denying a blanket extension for the ALMM List-II (solar cells) in July 2026, domestic solar manufacturing directly alters the cost of open-access RE for industrial buyers, the embedded carbon of Indian installations, and the strict Atmanirbhar Bharat tariff architecture.
Key Takeaways
- India's Production-Linked Incentive (PLI) scheme for high-efficiency solar PV modules spans two tranches with a total outlay of Rs 24,000 crore. It has attracted committed investment from major domestic manufacturing consortiums, targeting an aggregate capacity of 48.3 GW across Gujarat, Rajasthan, Andhra Pradesh, and Tamil Nadu.
- The PLI Tranche II scheme is structured in three baskets based on integration depth: Basket 1 (Polysilicon + Wafer + Cell + Module), Basket 2 (Wafer + Cell + Module), and Basket 3 (Cell + Module). The incentive, paid on actual sales over five years, heavily incentivises the shift toward high-efficiency TOPCon technologies.
- The Approved List of Models and Manufacturers (ALMM) maintained by the MNRE strictly restricts government-procured solar projects to using modules from listed domestic manufacturers. Crucially, on July 18, 2026, the MNRE issued an order denying a blanket extension for ALMM List-II (solar cells), ending broad exemptions for imported cells.
- Industrial open-access buyers utilizing captive solar were granted a final, limited relief window for the ALMM List-II cell mandate, expiring December 31, 2026. After this date, captive projects must source both modules and cells from the domestic ALMM list, introducing new supply chain constraints for industrial decarbonisation.
- The Basic Customs Duty (BCD) on imported solar modules (40% since April 2022) ensures that despite global module prices crashing to Rs 8–11/Wp, the landed cost in India remains competitive with domestic ALMM modules (currently Rs 14–18/Wp).
- The carbon implication of domestic solar manufacturing is a reduction in the lifecycle emission intensity of a solar installation relative to imports sourced from coal-heavy regions. Indian PLI modules manufactured on India's greening grid will have a progressively improving manufacturing-phase carbon footprint, relevant for EU CBAM additionality verification.
India's solar manufacturing ambition sits at the intersection of three distinct policy objectives: energy security (reducing dependence on external supply chains), industrial development (creating domestic value-addition), and climate ambition (enabling renewable targets at competitive costs). The PLI scheme is the primary instrument for pursuing all three simultaneously.
For industrial open-access RE buyers—the aluminium smelters, steel plants, and cement complexes building private solar procurement programmes in response to CCTS GEI targets and CBAM embedded emission requirements—the PLI's progress matters. Expanded domestic module supply reduces procurement competition with government tenders. The cost trajectory of these modules directly impacts the capital expenditure (CapEx) of captive solar and open-access Power Purchase Agreement (PPA) tariffs. Finally, the improving carbon footprint of domestic modules becomes highly relevant for EU supply chain due diligence (CSDDD) assessments.
The ALMM List-II Mandate and Open Access Constraints
The regulatory landscape tightened significantly in Q3 2026. While the ALMM mandate for solar modules (List-I) has been firmly established, the MNRE issued a critical order on July 18, 2026, officially denying a blanket extension for the exemption of ALMM List-II, which mandates the use of domestically manufactured solar cells.
For industrial consumers deploying captive solar, a final, limited relief window was granted until December 31, 2026, specifically for Net-Metering and Open Access renewable energy projects. Any industrial captive solar deployed after this expiration date must source exclusively from ALMM List-II enlisted cell manufacturers, effectively eliminating the loophole of importing cheap cells to assemble into domestic modules. This establishes a strict, fully domestic supply chain requirement for upcoming industrial decarbonisation projects.
The BCD tariff architecture and price parity
The 40 percent Basic Customs Duty (BCD) on imported solar modules creates a price wedge that protects domestic capacity. While industrial open-access buyers were historically not bound by ALMM List-I and could technically import modules, the 40 percent BCD applies to all importers. This ensures that foreign module imports, despite historically low FOB prices, are effectively brought back into price parity with domestic PLI modules once landed.
Solar Module Cost Comparison — Domestic PLI vs Chinese Import (BCD-Adjusted) · Sept 2026
| Module Source | FOB Price | BCD (if import) | Landed Cost India | Efficiency | CBAM Additionality Consideration |
|---|---|---|---|---|---|
| Chinese TOPCon/PERC (non-ALMM) | Rs 8–11/Wp (export price) | +40% BCD → Rs 12–15/Wp | Rs 12–15/Wp | 22–24% | Higher manufacturing-phase carbon footprint tied to coal-heavy regional grids |
| Domestic PLI mono-PERC (ALMM-listed) | Rs 14–16/Wp (current) | No BCD (domestic) | Rs 14–16/Wp | 21–23% | Manufacturing grid declining toward 0.50 tCO₂/kWh by 2030 |
| Domestic PLI TOPCon (ALMM-listed) | Rs 16–18/Wp (premium) | No BCD (domestic) | Rs 16–18/Wp (premium) | 24–26% | Higher efficiency reduces land requirement and system BOS cost |
| Domestic PLI (FY2027-28 projected) | Rs 12–14/Wp (scale economies) | No BCD | Rs 12–14/Wp | 23–25% | Converging with international prices as PLI scales fully |
Why the PLI's carbon argument matters for industrial buyers building CBAM-compliant RE procurement. When an aluminium smelter installs captive solar to reduce its CBAM Scope 2 embedded emissions, the CBAM Implementing Regulation requires additionality verification confirming that the renewable electricity comes from a new additional source. As EU supply chain due diligence regulations (CSDDD) begin requiring industrial buyers to disclose the carbon footprint of key supply chains, the provenance of solar modules may become a disclosure item. Indian PLI modules manufactured on India's decarbonising grid will have a progressively lower manufacturing-phase carbon footprint than modules manufactured in isolated, coal-heavy grids abroad.
Frequently Asked Questions
Does the ALMM mandate apply to industrial captive solar?
Historically, ALMM applied strictly to government-funded projects. However, the regulatory net is tightening. With the July 2026 MNRE order denying a blanket extension for ALMM List-II (cells), Open Access and Net-Metering captive projects only have an exemption window until December 31, 2026. After this date, they must utilize domestically manufactured cells from the approved list, restricting the ability to use imported components for industrial decarbonisation projects.
Does using PLI-manufactured solar modules make a captive solar installation more CBAM-compliant?
The CBAM additionality requirement for renewable electricity focuses on whether the generation source is genuinely new and additional, not explicitly on the manufacturing origin of the solar modules. However, the EU CSDDD supply chain disclosure regulations may require disclosure of the upstream carbon footprint of key supply chain inputs. In that context, the lower manufacturing-phase carbon of PLI modules could become a supplier qualification differentiator.
When will PLI-manufactured modules reach full cost competitiveness with imported modules?
Full BCD-unadjusted cost competitiveness requires domestic manufacturing costs to decline and absorb fully integrated scale economics. With global prices having crashed significantly, the BCD currently provides the essential tariff protection bridging the gap between Rs 8–11/Wp international rates and Rs 14–18/Wp domestic rates. Industry analysts project true convergence in integration costs by FY2027-28 as the full 48.3 GW of capacity scales across polysilicon, wafers, cells, and modules within India.
Sources
- MNRE — Order regarding ALMM List-II (Solar PV Cells) Exemption Expiration (July 18, 2026)
- MNRE — PLI scheme for Solar PV Modules and Approved List of Models and Manufacturers (ALMM)
- Ministry of Finance — Basic Customs Duty notification on solar cells and modules
- JMK Research — India solar module manufacturing and PLI tracker
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