4 min readNew DelhiUpdated: Jul 19, 2026 08:24 AM IST
One-and-a-half month after implementing mandatory domestic cell sourcing mandates for all domestic, commercial and industrial solar projects, the Ministry of New and Renewable Energy (MNRE) on Saturday exempted these projects from the mandatory cell sourcing requirement till December 31.
In an office memorandum, the ministry said the decision has been taken after detailed deliberations with various stakeholders of the solar industry to ensure a smooth transition to mandatory domestic cell sourcing mandate.
The exemption comes after the government had on May 25 said that there would be “no blanket” relief for domestic cell sourcing mandates despite developers seeking an extension of the deadline.
It, however, said certain projects would be eligible for case-by-case extensions to protect investments already made, provided developers have either installed solar modules or taken key implementation steps such as land acquisition, financial closure and connectivity arrangements.
The present exemption effectively extends the May 31 deadline to December 31, giving these projects an additional seven months to commission without complying with the mandatory domestic cell sourcing mandate.
Projects commissioned thereafter will be required to meet the domestic cell sourcing mandate.
“The number and capacity of module manufacturers is pretty high vis-a-vis domestic cell manufacturers. This will allow domestic module manufacturers to get some more time to adjust to the ALMM-II and protect their investment,” a senior government official told The Indian Express, explaining the latest move.
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Cells are the building blocks of solar modules that convert sunlight into electricity. The manufacturing chain begins with polysilicon, which is processed into ingots. These ingots are sliced into wafers, which, in turn, are used to manufacture solar cells. These cells are subsequently assembled into modules, or panels.
India has a large solar module manufacturing base, nearly 200 gigawatts (GW) per annum. But the manufacturing capacity of cells, the primary constituents of these modules, is far lower at around 30 GW.
This means much of the module manufacturing capacity has been built upon imported cells.
Even though the mandatory domestic cell sourcing mandate is aimed at reducing India’s dependence on imports and strengthening the domestic solar manufacturing ecosystem, it could disproportionately affect smaller solar module manufacturers which, unlike larger companies, may not manufacture their own cells.
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The new mandate had sparked concerns among module manufacturers, particularly non-integrated players — those without internal cell manufacturing facilities, this newspaper had earlier reported.
Industry executives had cautioned that such companies could face significant supply risks as they would now be forced to procure domestically manufactured cells from larger competitors that also operate in the module market, potentially creating an uneven playing field.
Meanwhile, India’s solar module manufacturers are currently grappling with overcapacity and weakening export opportunities amid steep US tariff barriers.
Against solar capacity installations of around 45 GW in 2025-26, India’s annual solar module production is estimated at nearly 60-65 GW, highlighting the growing oversupply concerns in the sector. Industry sources said capacity utilisation levels at several module assembly plants are currently hovering around 30-40%.
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Industry executives had expressed apprehension that the domestic sourcing mandate for solar cells would push up the prices of domestically manufactured cells, making cell production more lucrative for integrated manufacturers because of stronger margins and assured demand.
The mandate also threatened to hit the country’s flagship solar rooftop program, PM Surya Ghar: Muft Bijli Yojana by pushing up domestic solar cell prices and limiting the availability of rooftop solar panels.
Taking cognizance of the issue, Santosh Kumar Sarangi, Secretary at MNRE in June held a meeting with domestic solar cell manufacturers to emphasise the need to ensure adequate availability of domestically-manufactured solar PV cells and Domestic Content Requirement (DCR) solar modules, especially for vendors and installers engaged in setting up of Distributed Renewable Energy (DRE) solar projects like solar rooftop plants and solar agricultural pumps, while also keeping the prices reasonable.