India’s solar manufacturing industry is gearing up for significant expansion, with module capacity expected to surpass 165 GW by March 2027, rising from about 109 GW projected in 2025, according to ICRA. Solar cell capacity is also on track to accelerate, reaching nearly 100 GW by December 2027.
The growth is being driven by strong government support, including the Production Linked Incentive (PLI) scheme, customs duties on imported modules and cells, and the Approved List of Models and Manufacturers (ALMM) that prioritizes locally produced equipment. Together, these policies have positioned India as one of the fastest-growing solar manufacturing hubs globally.
Potential Oversupply as Capacity Outpaces Demand
However, the rapid addition of new capacity brings emerging challenges. India’s annual domestic installation demand is expected to remain between 45–50 GW, while module production could reach 60–65 GW. At the same time, rising trade barriers in export markets—especially the United States—have slowed overseas shipments. As more supply is pushed into the domestic market, price competition is intensifying.
Margins Strong for Now, But Pressure Building
Solar module manufacturers are currently enjoying healthy operating margins of around 25% in FY25. Yet analysts caution that profitability may decline as competition increases and capacities expand faster than demand. Additionally, modules made with Indian-manufactured cells typically cost three to four cents per watt more than those made with imported cells, which affects their price competitiveness.
Continued Dependence on Global Supply Chains
Despite strong domestic growth, India remains heavily dependent on global supply chains, particularly China. China accounts for:
>90% of global polysilicon and wafer production
~85% of solar cells
~80% of finished modules
This concentration makes Indian manufacturers vulnerable to global pricing shifts and supply volatility. Experts note that vertically integrated companies, which manufacture both cells and modules in-house, will be better positioned to control costs and maintain margins.
A Sector at a Strategic Crossroads
As reported by businessworld.in, as India scales up solar manufacturing, the sector is approaching a critical inflection point. It holds the opportunity to strengthen self-reliance in clean energy and emerge as a global supply hub. However, managing oversupply risks, price pressures, and technology dependence will be key to sustaining long-term growth.
