Government Said To Relax ALMM Norms For Two Years To Meet Solar Panel Shortage

The Ministry of New and Renewable Energy will announce in a week that it is relaxing the Approved List of Models and Manufacturers for two years, according to people familiar with the matter, who spoke on condition of anonymity.

Union Power Minister RK Singh recently said, at an event organised by Business Today, that he plans to relax the ALMM mandate for two years, since the domestic solar panel manufacturers are unable to meet the present demand.

ALMM was introduced in 2021 as a non-tariff barrier to boost domestic manufacturing, by approving the list of models and manufacturers who can participate in the solar development projects bid out by the government. It was later extended to the government’s open-access projects as well.  

As of date, 83 Indian manufacturers with a combined capacity of 21 gigawatts have been approved under the list, the minister said. 

The barrier, along with a basic custom duty of 40% on the import of solar panels from China, completely stalled the imports, according to the minister. It affected the government's development target because only 10 gigawatts of 500-watt peak panels could be made in the country, but the government had given out about 70 gigawatts for installation.

"I have put up a total barrier, ALMM, under which no Chinese company was listed, so they can’t export," the minister said. "But I have expanded the bid so fast that my existing domestic capacity is not able to meet it," he said. 

If the ALMM stays in place, it could take seven years to complete the projects under implementation, according to Singh. "But we can’t wait seven years," he said. "So, I have decided to relax ALMM for another two years." 

Before the imposition of ALMM, Chinese manufacturers supplied 85% of India’s panel demand. The shortage of panels led to project delays. Besides, over 25 GW of projects were held up for lack of grandfathering from the government because they were awarded before the ALMM was introduced but the commercial date was set after it. 

The two-year relaxation will make it possible for Chinese and other foreign companies to take part in solar development projects in the country, according to industry experts.

It will be a positive development to allow foreign manufacturers into Indian projects, but basic customs duty is still an issue from a cost perspective, according to a Chinese manufacturer's India representative, who spoke on condition of anonymity.

They may look at the FTA route to bring panels to India for the next two years or tie up with local manufacturers to complete the unfinished panels, the person mentioned above said. 

According to domestic solar panel manufacturers, delaying ALMM implementation will have a negative impact on capacity expansion investments made by domestic manufacturers, slowing progress towards realising an Atmanirbhar Bharat.

The implementation of ALMM is a key aspect of protecting investments worth around $7.2 billion, or Rs 53,773 crore, that the country would require over the next three to four years to indigenise the solar manufacturing value chain, according to data from the Center for Energy, Environment, and Water.   

With the continued focus on domestic manufacturing, the Indian solar industry is expected to have more than 95 gigawatts of PV manufacturing capacity by the end of the calendar year 2025. Solar cell production is expected to reach 18 GW by the end of 2023, according to JMK Research. 

China holds 80% share of all key manufacturing stages of solar panels in the global solar market, according to Hitesh Doshi, president, All India Solar Industries Association and CMD of Waaree Energies.  

"China concentrating the supply chains on itself is leading to imbalances, and correction is needed to create a solar industry that is resilient to supply-side shocks or other crisis. We are confident that India can play a larger role with the support of favourable and timely implementation of policies such as ALMM," he said.