India’s Solar Module Capacity To Surpass 125 GW By 2025, Raising Concerns Of Oversupply: Wood Mackenzie

India’s solar module manufacturing capacity is set to exceed 125 GW by 2025, marking a remarkable expansion that is more than three times the current domestic demand of approximately 40 GW. According to Wood Mackenzie’s latest report, Perfect Storm in the Indian Solar Supply Chain, this rapid growth could result in an inventory buildup of around 29 GW by the third quarter of 2025, posing new challenges for the industry.

The surge in capacity reflects the strong impact of India’s Production Linked Incentive (PLI) scheme, which has successfully driven large-scale investments and accelerated domestic manufacturing. However, this progress comes with the challenge of balancing rapidly growing supply with demand in both domestic and international markets. The situation is further complicated by a significant downturn in India’s primary export destination — the United States.

Wood Mackenzie’s analysis indicates that India’s solar exports have been severely affected by the new 50% reciprocal tariffs imposed by the US. As a result, India’s module exports to the US dropped by 52% in the first half of 2025 compared to the same period in 2024. This sharp decline has led several Indian manufacturers to halt plans for setting up factories in the US and shift their focus back to the domestic market.

“India’s government’s PLI scheme has been highly effective in spurring factory announcements, but the industry is now seeing warning signs of rapid overcapacity similar to those that preceded China’s recent price collapse,” said Yana Hryshko, Head of Solar Supply Chain Research at Wood Mackenzie. “The challenge has shifted from building capacity to achieving cost-competitiveness and diversifying export markets.”

The report further notes that India faces a significant cost disadvantage compared to global competitors. An Indian-assembled module that uses imported cells costs at least $0.03/W more than a fully imported Chinese module. Additionally, a fully “Made in India” module—manufactured using only domestic cells and components—would cost more than twice as much as a Chinese counterpart. This makes Indian products uncompetitive in global markets unless supported by strong government policies and incentives.

To counter these cost pressures, India has introduced several protective measures, including the Approved List of Models and Manufacturers (ALMM) and a proposed 30% anti-dumping duty on Chinese cells and modules. These policies aim to safeguard domestic manufacturers during this transitional phase as they build scale and improve cost efficiency. Despite the short-term headwinds, the report emphasizes that India remains well-positioned to emerge as a global leader in solar manufacturing. With installed manufacturing capacity expected to surpass local demand significantly, the country must now pivot toward developing new export markets and investing in advanced technologies to sustain long-term growth.

“India is at a crossroads, but it holds the clearest potential to become the only credible, large-scale alternative to the Chinese solar supply chain,” Hryshko added. “The current challenges are not setbacks, but rather a roadmap for what comes next. The focus must now move from simply expanding capacity to enhancing competitiveness through innovation, research and development, and global market diversification. Success will depend on the ability to tap new opportunities in Africa, Latin America, and Europe. The foundation is built; the next step is ensuring sustainable, technology-driven growth for the future.”

Overall, Wood Mackenzie’s findings underline that while India’s solar manufacturing sector has achieved remarkable scale, its future success will depend on cost optimization, global market access, and innovation — key factors that will determine whether the country can transform its manufacturing momentum into long-term global competitiveness.