India’s Solar PV Exports Surge 23-Fold, But Domestic Supply Faces Challenges Amid Rising Global Demand – Report

Indian solar photovoltaic (PV) exports have seen a massive surge, rising over 23 times between FY2022 and FY2024, with the US being the primary destination, accounting for over 97% of exports in FY2023 and FY2024. This significant growth has been driven by several factors, including the US’s restrictive trade policies on Chinese imports, which have shifted demand to alternative sources, and India’s increasing PV production capacity. Additionally, as part of a global “China Plus One” strategy, countries are looking for reliable suppliers beyond China, positioning India as a strong alternative for solar manufacturing. Consequently, Indian PV manufacturers can command higher profit margins in developed markets, especially the US, which benefits their overall revenue streams.

Leading Indian PV manufacturers have actively expanded their presence in export markets. Each of these companies has exported more than half of its production in FY2024, and some have even planned new manufacturing facilities in the US, encouraged by incentives under the Inflation Reduction Act (IRA). This expansion strategy aims to build a competitive edge by achieving economies of scale, enhancing product quality, and penetrating global markets with a focus on high-efficiency solar technologies. Furthermore, Indian manufacturers like ReNew Power and Navitas are strengthening their international reach, with new facilities in the US anticipated to further drive exports.

While the US is currently the dominant market for Indian PV exports, demand from African and other Asian countries is also rising. Countries such as South Africa, Kenya, and UAE have started importing Indian solar modules, and neighboring nations like Bangladesh and Nepal are increasingly dependent on India for solar products due to proximity and trade ties. However, Indian exports to Europe remain low despite the region’s interest in reducing dependence on Chinese solar imports. This discrepancy is partly due to Europe’s relatively lenient restrictions on Chinese products compared to the US.

This export growth, while beneficial for the Indian economy, has created a supply-demand imbalance in the domestic market. With most PV production directed toward exports, India’s available supply for local consumption in the next two years is projected to be only 21GW and 25GW, falling short of the 30GW required annually to meet national renewable energy goals. This gap particularly affects smaller domestic projects like residential rooftop installations, which rely on smaller batch orders and face price sensitivities. As a result, project costs have escalated, making domestic solar solutions less affordable.

Government-led solar initiatives, such as the PM Surya Ghar and PM-KUSUM schemes, face supply constraints as well. Domestic content requirements under these programs mandate locally manufactured modules, but with much of India’s PV production geared toward exports, local project developers encounter difficulties in sourcing high-quality modules. Consequently, DCR modules are 30% costlier than alternatives, raising concerns over India’s ability to meet its renewable energy targets.

To maintain momentum in exports and address domestic needs, a balanced approach is essential. India should continue capitalizing on the US market’s potential and pursue vertical integration to enhance supply chain resilience. Supporting upstream production for components like wafers, ingots, and cells will also help India meet growing export demands while stabilizing the local supply chain.