India’s Solar Manufacturing Capacity Surges 13x, Utilisation Drops To 40%

India’s solar manufacturing expansion has accelerated sharply since 2020, but capacity growth is now significantly outpacing domestic demand, raising concerns of structural oversupply. 

Capacity Expansion and Utilisation Decline 

Solar module manufacturing capacity has expanded 13x since 2020 and now stands at nearly 3x domestic demand, according to BloombergNEF. By year-end, total module capacity is expected to reach around 154 GW. 

Despite this scale-up, utilisation levels at module-assembly plants have declined to about 40%, down from over 70% in the year through March 2023. 

India installed a record 38 GW of solar capacity in 2025, equivalent to about 53 GW in DC terms. However, this remains well below current manufacturing output potential. 

Policy Push and Upstream Expansion 

India imported about 80% of its solar modules until 2020. Following pandemic disruptions and geopolitical tensions with China, the government introduced import taxes on cells and modules and created an approved list of domestic manufacturers. 

From June, all modules sold domestically must use locally manufactured cells. A similar mandate for wafers is planned from June 2028. Cell manufacturing capacity is projected to rise to 100 GW over the next 2 years, a 4x increase from current levels, according to ICRA Ltd. 

Export Risks and Market Pressures 

Exports have been impacted by US tariffs introduced last year. Although a trade deal lowered levies, uncertainty persists along with anti-dumping investigations.  

The Alliance for American Solar Manufacturing and Trade has sought duties of nearly 214% on Indian supplies. 

Nearly 30 GW of India’s module capacity relies on MonoPERC cells, a technology gradually being replaced by more efficient alternatives. 

Read More: India Hits 35 GW Distributed Solar Milestone via $13 Billion Investment! 

Conclusion 

While India’s solar manufacturing ecosystem has expanded rapidly to support energy transition goals, rising capacity, technology shifts and export uncertainties are creating supply pressures that may reshape the industry in the coming years. 

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