Why India's increased solar module output is a cause for concern
At 233GW, India is now the world’s second-largest solar module manufacturer, but capacity is heavily concentrated downstream and is set to outstrip demand through 2030
- Sep 1, 2026,
- Updated Sep 1, 2026 6:05 PM IST
India has built solar module capacity faster than its market can use it. Having moved from over 90% import dependence to become the world’s second-largest solar photovoltaic (PV) module manufacturer, the country now holds 233 gigawatts (GW) of capacity as of June 2026. However, its module factories are running at just 35–40% utilisation, well short of the 50–65% needed to operate sustainably.
A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research titled Assessing overcapacity risk in India’s solar PV manufacturing market finds that this expansion has been overwhelmingly concentrated at the module stage.
In Case You Missed It: Solar may remain king, but India’s next renewable boom could be in batteries and transmission
Module capacity now stands at nearly 7x cell capacity and 116x ingot-wafer capacity, leaving upstream segments such as cells, wafers, and polysilicon underdeveloped and the supply chain dependent on imported inputs, predominantly from China.
“India has added module capacity faster than the market can absorb it. With around 135GW more already planned or under construction and factories running at 35–40%, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets,” says Prabhakar Sharma, Senior Consultant at JMK Research and lead author of the report.
The report finds this imbalance is unlikely to ease by 2030. India’s solar deployment is expected to grow strongly, but not fast enough to absorb the capacity already committed.
Focus on exports
New demand from data centres, green hydrogen and ammonia, and exports offers the most credible upside, an incremental 17–22GW by 2030, with green hydrogen the single largest avenue given the dedicated renewable capacity it requires. Even so, this is unlikely to fully offset the planned scale of expansion.
Exports will therefore be pivotal, and here the picture is shifting fast. India’s export base is heavily exposed to a single market: the US absorbed around 97% of module export volume in financial year (FY) 2026.
That channel has since been disrupted by combined US duties exceeding 200% on most Indian manufacturers, which have cut exports to the US by 44–47% from their FY2024 peak. The European Union, whose recent supply-chain and sourcing rules increasingly reward diversification, now offers the most structured medium-term alternative.
“India may have the opportunity to unlock new export markets, provided Indian solar PV manufacturers can effectively compete with Chinese manufacturers by investing in R&D and the manufacturing of polysilicon, ingots, wafers, and cells,” says Charith Konda, Lead Energy Specialist at IEEFA, and contributing author of the report.
Smaller players hit
On the supply side, the report expects the gap between capacity and demand to reshape the industry. Smaller, non-integrated manufacturers will come under greater pressure, while larger, vertically integrated players are positioned to gain. Domestic manufacturing is also likely to move upstream, from modules into cells, wafers, and eventually polysilicon, reducing reliance on imported inputs.
“The challenge is no longer building capacity; it is using it well and deepening the value chain. That means spreading incentives evenly across cells, wafers, and polysilicon rather than rewarding modules alone, strengthening industry-research collaboration, and giving exporters targeted, time-bound support,” says Chirag H. Tewani, Senior Research Associate, JMK Research, and report co-author.
Alongside these measures, the report calls for faster power transmission and right-of-way (RoW) clearances to sustain domestic deployment, and a framework to repower ageing solar assets.
It concludes that today’s module overcapacity is best viewed as a transitional feature of a fast-expanding industry, one that can be resolved through demand absorption, consolidation, and disciplined upstream investment over the coming decade.
India has built solar module capacity faster than its market can use it. Having moved from over 90% import dependence to become the world’s second-largest solar photovoltaic (PV) module manufacturer, the country now holds 233 gigawatts (GW) of capacity as of June 2026. However, its module factories are running at just 35–40% utilisation, well short of the 50–65% needed to operate sustainably.
A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research titled Assessing overcapacity risk in India’s solar PV manufacturing market finds that this expansion has been overwhelmingly concentrated at the module stage.
In Case You Missed It: Solar may remain king, but India’s next renewable boom could be in batteries and transmission
Module capacity now stands at nearly 7x cell capacity and 116x ingot-wafer capacity, leaving upstream segments such as cells, wafers, and polysilicon underdeveloped and the supply chain dependent on imported inputs, predominantly from China.
“India has added module capacity faster than the market can absorb it. With around 135GW more already planned or under construction and factories running at 35–40%, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets,” says Prabhakar Sharma, Senior Consultant at JMK Research and lead author of the report.
The report finds this imbalance is unlikely to ease by 2030. India’s solar deployment is expected to grow strongly, but not fast enough to absorb the capacity already committed.
Focus on exports
New demand from data centres, green hydrogen and ammonia, and exports offers the most credible upside, an incremental 17–22GW by 2030, with green hydrogen the single largest avenue given the dedicated renewable capacity it requires. Even so, this is unlikely to fully offset the planned scale of expansion.
Exports will therefore be pivotal, and here the picture is shifting fast. India’s export base is heavily exposed to a single market: the US absorbed around 97% of module export volume in financial year (FY) 2026.
That channel has since been disrupted by combined US duties exceeding 200% on most Indian manufacturers, which have cut exports to the US by 44–47% from their FY2024 peak. The European Union, whose recent supply-chain and sourcing rules increasingly reward diversification, now offers the most structured medium-term alternative.
“India may have the opportunity to unlock new export markets, provided Indian solar PV manufacturers can effectively compete with Chinese manufacturers by investing in R&D and the manufacturing of polysilicon, ingots, wafers, and cells,” says Charith Konda, Lead Energy Specialist at IEEFA, and contributing author of the report.
Smaller players hit
On the supply side, the report expects the gap between capacity and demand to reshape the industry. Smaller, non-integrated manufacturers will come under greater pressure, while larger, vertically integrated players are positioned to gain. Domestic manufacturing is also likely to move upstream, from modules into cells, wafers, and eventually polysilicon, reducing reliance on imported inputs.
“The challenge is no longer building capacity; it is using it well and deepening the value chain. That means spreading incentives evenly across cells, wafers, and polysilicon rather than rewarding modules alone, strengthening industry-research collaboration, and giving exporters targeted, time-bound support,” says Chirag H. Tewani, Senior Research Associate, JMK Research, and report co-author.
Alongside these measures, the report calls for faster power transmission and right-of-way (RoW) clearances to sustain domestic deployment, and a framework to repower ageing solar assets.
It concludes that today’s module overcapacity is best viewed as a transitional feature of a fast-expanding industry, one that can be resolved through demand absorption, consolidation, and disciplined upstream investment over the coming decade.