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CRISIL, a research agency, anticipates that the implementation of the Approved List of Models and Manufacturers (ALMM) from April 1, 2024, will help maintain the operating margins of domestic solar module makers at 12–14 percent in the fiscal year 2025. This projection aligns with the levels expected in the current fiscal year, supported by robust export demand.
The research agency notes that the profitability of module makers is expected to nearly double in the current fiscal year compared to the previous year. The rising share of exports, which commands a premium of 15–20 percent over domestic prices, is expected to offset the surge in imports in the absence of ALMM.
Ankit Hakhu, Director at CRISIL Ratings, points out that Indian module manufacturers have been facing challenges from cheaper imports due to the temporary suspension of ALMM until April 1, 2024. However, trade restrictions on China, particularly by the US, are driving overseas demand for Indian modules. India's module exports are projected to triple to 8–9 GW in the current fiscal year.
With ALMM set to return in FY25, the domestic demand for Indian modules is expected to strengthen. The reinstatement of ALMM is seen as a measure to curb competition from imports, leading to a firming up of domestic module prices. Demand growth is expected to increase utilisation rates, with 70–75 percent of domestic demand being met by Indian module producers in FY25, up from 30-35 percent in the current fiscal year.
Ankush Tyagi, Associate Director at CRISIL Ratings, emphasises that the return of ALMM, along with other factors, will help offset the pressure on profitability for domestic module manufacturers. Although the share of exports is projected to decline to 35–40 percent in FY25 from 50 percent in FY24, higher sales volumes and healthy margins are expected to lead to robust accruals for module makers. This, in turn, will support capital expenditure for capacity expansion and technology upgrades and sustain healthy credit profiles.
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