India's solar module manufacturing capacity to outpace demand in three years

India’s solar manufacturing capacity is set for rapid expansion, with domestic module and cell capacities expected to reach 200 GW and 100 GW, respectively, by FY28, significantly outpacing the annual domestic module demand of 50 GW over the next three years, according to CareEdge Ratings. By July 2025, India had installed 118 GW of module capacity and 27 GW of cell capacity, though effective operational levels stood at 80-85 GW for modules and 11-13 GW for cells due to stabilisation phases. Current production is estimated at 50-60 GWp for modules and 8-10 GWp for cells, leaving an import dependency of 40-45 GWp for cells. This expansion has been fuelled by rising solar installations, proactive government policies, and improved access to financing avenues.

CareEdge noted that domestic cell capacity is projected to reach 100 GWp by FY28, supported by over Rs. 55,000 crore (US$ 6.2 billion) in capital expenditure and growing backward integration. This shift could see module production increasingly directed toward exports, while cell output may surpass domestic needs in the medium term. While standalone module manufacturers may face consolidation pressures, integrated players are expected to benefit from cost efficiencies. Export prospects remain strong despite tightening US policies, with opportunities emerging from America’s efforts to diversify supply chains away from China. Modules meeting the US Domestic Content Requirement (DCR) fetch margins two to three times higher than domestic sales. Recent Goods and Services Tax (GST) rate cuts are expected to reduce solar project costs by 4-5%, while tariff dynamics remain sensitive to mandatory domestic procurement norms under the Approved List of Models and Manufacturers (ALMM-II).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.