India’s solar manufacturing boom risks turning into a glut, even as the industry rides high.
The push to build domestic production, spurred by pandemic disruptions and frayed ties with China, has unleashed a 13-fold expansion in capacity since 2020—reaching roughly triple current domestic demand, according to BloombergNEF. That surge was so large that, late last year, the government asked banks financing the sector to tread carefully. At the same time, manufacturers are pulling back from lower-value output to focus on higher-margin work.
Capacity utilization at India’s module-assembly plants has fallen to about 40% from more than 70% in the year through March 2023, a period when exports to the United States were booming before new tariffs hit the market. “This is not a slowdown. It’s a structural glut,” says Avinash Hiranandani, managing director of RenewSys India Pvt. Ltd.
Bloomberg notes that India imported around 80% of its solar modules up to 2020. The pandemic and ensuing supply-chain disruptions intensified policymakers’ long-standing objective to build domestic capabilities. In response, India began taxing imported cells and modules and created a list of approved homegrown manufacturers, effectively sidelining many Chinese suppliers.
The quick result: domestic module capacity expanded rapidly as investors bet on India’s energy transition and roaring demand abroad, particularly in the US.
However, India still relies on China for upstream components like cells and wafers. New mandates could shift this dynamic: starting June, all modules sold in India must use locally produced cells, and the renewable energy ministry plans to extend similar requirements to wafers by June 2028.
ICRA Ltd. estimates that cell-manufacturing capacity could rise to 100 gigawatts over the next two years—a fourfold jump from today—potentially creating another surplus when it comes online after mid-2027. Sameer Gupta, chairman of Jakson Ltd., warns that capacity arriving later could struggle to find buyers.
Hiranandani predicts that today’s high cell prices are a result of a short local supply, but prices will crash once capacity overshoots demand. This oversupply could be painful for mid-sized players trying to recover their investments.
Demand growth in India itself hasn’t kept pace with supply. Official data show a record 38 gigawatts of solar installations in 2025 (about 53 gigawatts in DC terms), but that pales next to the roughly 154 gigawatts of manufacturing capacity that existed by year’s end.
Exports have faced headwinds from US tariffs enacted last year, though a trade deal has lowered some levies. Uncertainty persists amid anti-dumping probes. The Alliance for American Solar Manufacturing and Trade has urged duties approaching 214% to curb imports from India.
A potential path forward is to broaden international markets. Rishabh Jain of the Council on Energy Environment and Water suggests following China’s example and leveraging the Export-Import Bank of India to finance solar projects in regions like Africa, with a condition that projects use Indian-made modules. “It’s time to think more globally,” he notes.
In the near term, analysts warn that not every player will survive the glut, especially as technology advances and less-advanced firms struggle to fund ongoing upgrades.
Nearly 30 gigawatts of India’s module capacity currently uses MonoPERC cells, which are increasingly seen as obsolete with newer, more efficient technologies emerging. This pace of change will require ongoing, costly upgrades. As Prashant Mathur of Saatvik Green Energy puts it, “Eventually, it’s going to be a big boys’ club,” underscoring the battlefield-like competition ahead.
