Navigating Overcapacity: The Solar Module Manufacturing Challenge

The solar module manufacturing industry in India faces overcapacity challenges, impacting profitability and prompting potential consolidation among smaller players. Policy support has driven manufacturing expansion, but tariffs and export challenges persist. Vertically integrated manufacturers may benefit long-term, while domestic cost increases and geopolitical dependencies pose risks.

The solar module manufacturing industry in India is confronting significant challenges as overcapacity threatens profitability and encourages consolidation among smaller players. According to ICRA, this trend is largely driven by strong policy initiatives meant to bolster domestic production.

ICRA projects a 165 GW capacity in solar photovoltaic (PV) module manufacturing in India by March 2027, an increase from 109 GW, propelled by government policies such as the approved list of models and the imposition of basic customs duties on imports. However, an imbalance looms, with production expected to outstrip annual installation rates.

The imposition of US tariffs has further complicated matters by reducing export volumes, forcing a reorientation to the domestic market. While vertically integrated manufacturers might see long-term benefits from enhanced supply chain control, challenges such as geopolitical dependencies and higher costs for domestic modules remain critical issues.