India’s solar module manufacturing capacity is projected to exceed 125 GW by 2025, more than triple the domestic demand of around 40 GW, potentially creating an inventory surplus of 29 GW, according to consultancy firm Wood Mackenzie.

The rapid expansion has been driven by the government’s Production Linked Incentive (PLI) scheme, which has accelerated the establishment of new manufacturing facilities across the country.

However, the surge in capacity is now raising concerns of overproduction, especially amid declining exports to the United States, where the imposition of a 50 per cent reciprocal tariff caused Indian module shipments to drop by 52 per cent in the first half of 2025.

Wood Mackenzie noted that cost competitiveness continues to be a challenge. Indian-assembled modules using imported cells remain at least USD 0.03 per watt costlier than imported Chinese modules. Fully integrated ‘Made in India’ modules could cost more than twice as much as their Chinese counterparts without policy support.

To protect domestic producers, the government has introduced measures such as the Approved List of Models and Manufacturers (ALMM) and a proposed 30 per cent anti-dumping duty on Chinese modules.

Experts believe India has the potential to emerge as a viable alternative to China’s solar supply chain. However, long-term growth will depend on continued investment in research and development (R&D), technology upgradation, and diversification into export markets in Africa, Latin America, and Europe.

Meanwhile, CareEdge Advisory, a subsidiary of CareEdge Ratings, projected India’s total solar capacity to reach 216 GW by FY2028, supported by the PLI scheme’s multiple tranches covering integrated manufacturing across polysilicon, ingot, wafer, cell, and module stages.

The advisory noted that India’s solar installed capacity has grown 32-fold in a decade—from 3.9 GW in FY2015 to 127.3 GW as of September 2025—contributing 25.7 per cent of the nation’s total installed power capacity. FY2025 alone saw a record addition of 23.83 GW.

CareEdge also stated that module manufacturing capacity is expected to add another 100 GWp by FY2028—three to four times the projected annual demand of 50–60 GWp.

While overcapacity presents short-term challenges, industry analysts believe it sets a strong foundation for long-term competitiveness. The focus now must shift from scaling capacity to achieving cost efficiency through R&D and innovation.

(Source: Outlook Business)