India’s solar manufacturing sector confronts an unprecedented challenge as domestic capacity races toward potential oversupply by 2027, while global trade tensions threaten to reshape the entire industry landscape.
The numbers tell a dramatic story. India’s module production capacity has exploded from just 8 GW in 2017 to 68.4 GW today, with ambitious targets of 120 GW by 2030. Solar cell manufacturing has surged even more dramatically, expanding from 3 GW to 24.6 GW over the same period.
This breakneck expansion has been fueled by aggressive government policies, including the Production-Linked Incentive scheme and strategic import duties, alongside the Approved List of Models and Manufacturers framework.
But the growth masks critical structural weaknesses. The SBI Capital report reveals that India’s manufacturing remains dangerously skewed toward modules, while solar cell capacity lags below 30 GW. Even more concerning, the country has virtually no presence in upstream wafer and polysilicon production, despite targets to develop 40 GW of wafer capacity by March 2027.
The new ALMM-II mandate, requiring domestically manufactured cells for government projects starting June 2026, aims to address this gap but creates immediate supply pressures.
Meanwhile, China’s stranglehold on the global supply chain presents both threats and opportunities. Beijing controls over 93% of global polysilicon production, 97% of wafer manufacturing, and 85% of solar cell production. Single facilities account for substantial portions of worldwide output, creating what analysts call severe vulnerabilities.
Other regions struggle to compete. The European Union faces its first solar growth decline in over a decade for 2025, despite targets for 30 GW annual manufacturing capacity. The United States has made progress under the Inflation Reduction Act, with 98 new facilities online and 51 under construction, but faces a critical mismatch between 56.5 GW module capacity and just 20 GW operational cell production.
India’s export dynamics compound domestic supply concerns. The country exported 5.8 GW of modules in 2024 — triple the previous year — with 97% going to the United States. But rising US tariffs, set to hit 64% by August’s end, threaten this crucial export market.
On the other hand, the timing couldn’t be worse. Chinese producers plan to shut down one-third of polysilicon capacity to address overcapacity and price volatility. This restructuring creates both opportunities and challenges for India’s manufacturers as they develop domestic polysilicon capabilities under the PLI framework.
Overall, the convergence of domestic policy implementation and global trade tensions will determine whether India’s manufacturing expansion becomes a strategic advantage or triggers market instability. The success of ALMM-II implementation and upstream capability development will likely decide if the projected 2027 oversupply materializes as predicted.
