India’s Solar Cell Manufacturing Set To Surge To 55 GW By 2027 – Report

India’s solar cell manufacturing capacity is expected to rise significantly, reaching 50-55 GW by the fiscal year 2027, up from 10 GW in 2024. This five-fold increase is being driven by government policies aimed at reducing reliance on imported solar cells and modules. A report by Crisil Ratings highlights that this expansion will require an investment of approximately ₹28,000-30,000 crore, with funding likely to be structured in a 70:30 debt-equity ratio. The study examined four major domestic solar cell manufacturers, which together accounted for 54% of the country’s total production capacity as of March 31, 2024.

Government initiatives such as the ‘Make in India’ campaign and policy measures targeting import reductions are playing a key role in driving backward integration strategies. These policies are encouraging module manufacturers to expand their domestic cell production, thereby increasing overall capacity. The report notes that India’s solar module manufacturing capacity has already grown substantially, rising from 7 GW in 2020 to 60 GW by March 2024. This increase has led to a decline in module imports, which now account for 25% of total consumption, compared to 45% in the previous year. However, the country remains heavily dependent on imported solar cells, primarily from China, with imports still contributing around 80% of total cell consumption.

Given the increasing demand for renewable energy, India’s reliance on imported cells could grow further unless domestic supply expands accordingly. To address this, the government has mandated that only locally manufactured cells from its Approved List of Cell Manufacturers (ALCM) be used in open access and net metering projects. This requirement also applies to projects receiving government funding or where the government serves as a contracting party. Additionally, policies such as the Production-Linked Incentive (PLI) scheme and domestic content requirements are expected to strengthen the local manufacturing sector.

These measures have led to several announcements regarding new solar cell manufacturing projects, totaling around 45-50 GW in additional capacity. If these plans materialize, India’s total solar cell production could reach 55 GW within the next two years. This increase would enhance the country’s self-sufficiency and enable deeper integration at the cell level. For instance, the share of the total module cost captured within India could rise to 70-80% for locally manufactured cells, compared to 40-50% for modules relying on imported cells. Furthermore, the proportion of domestically produced modules supported by Indian-made cells is expected to grow beyond 50%, a significant jump from less than 15% in 2024.

Despite these positive developments, domestically produced cells remain considerably more expensive than imported ones. At current price levels, Indian-made cells are estimated to be 80-90% costlier due to higher conversion costs, as the country’s manufacturing sector lacks the large-scale efficiencies seen in other markets, particularly China. Additionally, pricing pressures from imported cells further impact local production costs. While incentives such as the PLI scheme may help manufacturers absorb some of these costs, solar project developers could still face increased expenses when setting up new projects.

The report emphasizes the need for continued policy support, particularly through non-tariff barriers like the ALCM and the Approved List of Models and Manufacturers (ALMM), to sustain demand for locally produced solar cells and modules. Additionally, global trade developments, including shifts in US trade policies and potential disruptions in wafer supplies—most of which are sourced from China—will be critical factors influencing India’s solar industry in the coming years.