Ministry of Renewable Energy Revives ALMM Mandate to Boost Domestic Solar Module Production

The Ministry of New and Renewable Energy (MNRE) has taken a significant step toward promoting indigenous manufacturing in the solar sector by reinstating the Approved List of Models and Manufacturers (ALMM) for the supply of solar photovoltaic (PV) modules to government projects, effective April 1, 2024. The ALMM mandate, aimed at boosting domestic solar module manufacturers, has been a key policy instrument introduced by the government to support the growth of the renewable energy sector.

Under the latest MNRE order, projects at an advanced stage of construction with orders for solar modules placed before March 31, 2024, will be exempted from the ALMM mandate. This exemption provision aims to ensure continuity in ongoing projects while implementing the ALMM requirements for future endeavors.

Initially introduced in 2021, the ALMM mandate served as a non-tariff barrier to stimulate domestic production by endorsing a list of indigenous models and manufacturers eligible to supply solar development projects initiated by the government. This mandate was later expanded to cover government open-access projects, with a current roster of 72 Indian manufacturers listed.

However, in March 2023, the government suspended the ALMM mandate for a year, citing the need to stimulate solar project installations in India, which had faced challenges due to the COVID-19 pandemic and the imposition of basic customs duty. This temporary suspension was aimed at providing relief to the industry and facilitating continued growth.

The latest MNRE order has clarified that the ALMM will exclusively apply to projects sponsored or subsidized by the government. This includes government agencies procuring power for internal consumption or distribution to the public through distribution companies.

Additionally, the ALMM will be enforced for solar PV rooftops and PM KUSUM schemes, both of which receive subsidies. However, projects established under open access or as captive by private entities will be exempted from the ALMM mandate.

Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings at ICRA Limited, welcomed the re-imposition of the ALMM mandate, citing it as a positive development for domestic original equipment manufacturers (OEMs). Kadam expressed optimism regarding the recent scale-up in domestic module manufacturing capacity, which is expected to enhance the availability of modules from domestic OEMs. However, Kadam highlighted the sector's continued reliance on imports for solar PV cells and wafers, underscoring the importance of establishing fully integrated units awarded under the production-linked incentive (PLI) scheme to reduce import dependency.

The perspective of independent power producers (IPPs), the earlier order exempting projects scheduled for commissioning until March 31, 2024, from the ALMM requirement remains beneficial. Furthermore, the exemption for open-access-based and captive solar projects allows these projects to source modules from the most cost-competitive sources, thereby promoting efficiency in project execution.

Driven by production-linked incentive (PLI) schemes, India's domestic solar module manufacturing capacity is projected to soar to 95-100 GW by 2026. Key players such as Reliance Industries, Tata Power Company, and JSW Energy, through their green power arms, are actively establishing solar PV module manufacturing capacities under the second tranche of the PLI scheme. This concerted effort underscores India's commitment to achieving its renewable energy targets and transitioning toward a sustainable future.