But the surge in new plants could create a different challenge, i.e., too much capacity
According to ICRA estimates, India’s solar manufacturing industry is heading for a sharp scale-up, with module capacity projected to cross 165 GW by March 2027, up from around 109 GW in 2025. Solar cell capacity is also set to rise rapidly, reaching nearly 100 GW by December 2027.
This expansion is being powered by government policies such as the Production Linked Incentive scheme for manufacturers, customs duties on imported modules and cells, and the Approved List of Models and Manufacturers that favours locally made products. Together, these measures have made India one of the fastest-growing solar manufacturing hubs in the world.
But the surge in new plants could create a different challenge, i.e., too much capacity. India’s annual solar installation demand is expected to stay between 45 and 50 GW, while domestic module output could touch 60 to 65 GW. With the United States and other markets imposing higher tariffs, exports have slowed, pushing more supply into the local market and squeezing prices.
For now, margins remain strong. Operating profitability for solar module makers is estimated at about 25 per cent in FY25. However, analysts expect pressure to build as competition intensifies and capacity growth outpaces demand. Modules produced using Indian cells also cost three to four cents per watt more than those using imported cells, affecting price competitiveness.
India’s dependence on global supply chains adds another layer of risk. China continues to dominate the upstream solar ecosystem, accounting for over 90 percent of global polysilicon and wafer production, about 85 per cent of solar cells, and nearly 80 per cent of finished modules. This makes Indian manufacturers vulnerable to fluctuations in international prices and raw-material availability.
Experts believe vertically integrated companies that make both cells and modules will be better positioned to manage costs and maintain profitability. With such massive capacity coming online, India’s solar sector stands at a turning point. It is poised for self-reliance in clean energy manufacturing but also facing the risk of oversupply, price pressure, and continued dependence on foreign technology.
