ICRA Predicts Indian Solar Module Manufacturing Capacity to Exceed 60 GW by 2025 Through Backward Integration

Representational image. Credit: Canva

ICRA, a leading credit rating agency, anticipates a substantial increase in India’s solar photovoltaic (PV) module manufacturing capacity by 2025. The current capacity stands at approximately 37 GW and is expected to surge beyond 60 GW by 2025. This growth is attributed to improved backward integration into cell and wafer manufacturing. Moreover, it is projected to further expand to nearly 100 GW, primarily driven by the capacity awarded under the production-linked incentive (PLI) scheme. This surge is bolstered by robust policy support and a rising demand for domestic solar power installations.


Key policy measures contributing to this expansion include the notification of the Approved List of Models & Manufacturers (ALMM), comprising solely domestic manufacturers, the imposition of basic customs duty on imported cells and modules, and the PLI scheme. Additionally, India’s solar power generation capacity is expected to experience significant growth in alignment with the country’s climate transition goals, further driving the demand for solar PV modules.

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Vikram V, Vice President & Sector Head – Corporate Ratings at ICRA, noted that while there has been a surge in PV module imports in FY2024 due to the abeyance of the ALMM order until March 2024 and a sharp decline in global module prices, India is poised to bolster its domestic manufacturing capacity with backward integration over the next few years. Additionally, the expected resumption of the ALMM order is set to reduce import dependence. Alongside the expansion of module capacity, Original Equipment Manufacturers (OEMs) are also anticipated to enhance wafer and cell manufacturing capacities, with cell capacity projected to surpass 25 GW by 2025 from the current level of approximately 6 GW. However, India is likely to remain reliant on polysilicon imports, as establishing these capacities will involve significant capital investment and take more time.


The solar PV module supply chain is predominantly led by China, which accounts for over 80% of the manufacturing capacity across polysilicon, wafer, cell, and modules. In contrast, India’s manufacturing capacity in this sector is relatively low and primarily concentrated in the final manufacturing stage. The PLI scheme is expected to change this landscape, fostering the establishment of integrated module units in India over the medium term.

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The Government of India (GoI) has granted incentives for setting up module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, covering the entire production chain from polysilicon to module. The capital expenditure required for these integrated module capacities is estimated to exceed Rs. 1.0 lakh crore. Given the substantial capacity expansion, domestic solar OEMs will need to target a share of the global demand through exports.

Vikram V further highlighted the export prospects for Indian module manufacturers, noting their substantial growth in exports, especially to the United States. Exports grew by over 364% in FY2023 compared to FY2022 and increased by 748% in the first five months of FY2024 compared to the same period in the previous year. This was driven by strong demand from the US and restrictions on module sourcing from China. However, the sustainability of this demand remains to be seen, as the US is expected to significantly expand its module manufacturing capacity under the Inflation Reduction Act, a significant climate legislation announced by the US government.

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