India’s Solar Module Manufacturing Capacity Reaches 233 GW Amid Growing Overcapacity Risks

India’s solar module manufacturing capacity has expanded rapidly, reaching 233 GW as of June 2026, but domestic demand has not kept pace with the growth, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research.

The report, titled “Assessing Overcapacity Risk in India’s Solar PV Manufacturing Market,” found that Indian module manufacturing facilities are currently operating at only 35–40% utilisation, compared with the estimated 50–65% level required for sustainable operations. The country has also shifted from more than 90% dependence on imported modules to becoming the world’s second-largest solar PV module manufacturer.

However, the expansion has been heavily concentrated at the module stage. India’s module manufacturing capacity is now nearly seven times its cell capacity and 116 times its ingot-wafer capacity, leaving upstream segments such as cells, wafers and polysilicon relatively underdeveloped. As a result, manufacturers continue to rely significantly on imported inputs, predominantly from China.

The report estimates that around 135 GW of additional module capacity is already planned or under construction. With existing factories operating below sustainable utilisation levels, the continued capacity expansion could increase pressure on manufacturers’ margins, returns and asset utilisation, particularly for standalone module producers.

According to the report, the capacity-demand imbalance is unlikely to be fully resolved by 2030. While India’s solar deployment is expected to continue growing, demand from sectors such as data centres, green hydrogen and green ammonia, along with exports, could provide additional market opportunities. These segments are estimated to contribute around 17–22 GW of incremental demand by 2030, with green hydrogen identified as the largest potential source.

Exports are expected to play a critical role in absorbing India’s growing module capacity. However, the country’s export market remains heavily concentrated in the US, which accounted for approximately 97% of India’s module export volume in FY2026. The report noted that this market has been disrupted by US duties exceeding 200% on most Indian manufacturers, contributing to a 44–47% decline in exports to the US from their FY2024 peak.

The European Union is emerging as a potential alternative export market, supported by supply-chain diversification and sourcing policies. However, the report said Indian manufacturers will need to improve cost competitiveness and technological capabilities to compete more effectively with Chinese producers.

The report expects the ongoing supply-demand imbalance to accelerate consolidation across India’s solar manufacturing sector. Smaller and non-integrated manufacturers could face greater pressure, while larger vertically integrated companies may be better positioned to withstand the current cycle. Manufacturing is also expected to gradually expand upstream into cells, wafers and polysilicon, reducing dependence on imported inputs.

IEEFA and JMK Research recommended strengthening incentives across the entire solar manufacturing value chain rather than focusing primarily on modules. The report also highlighted the need for greater industry-R&D collaboration, targeted and time-bound export support, faster transmission infrastructure development and right-of-way clearances, as well as a framework for repowering ageing solar projects.

The report concludes that India’s current module overcapacity could represent a transitional phase in the country’s rapidly expanding solar manufacturing sector. Demand growth, industry consolidation, export diversification and deeper upstream manufacturing will be critical to bringing capacity and demand into better balance over the coming years.