India’s Solar Sector Grapples with Module Glut and Supply Chain Imbalances

As per ANI, India’s solar manufacturing capacity has increased sharply, but growth across the supply chain has not been even, according to a report by Elara Securities.  

The report said module assembly has expanded quickly, while upstream segments such as cells, wafers, ingots and polysilicon remain relatively small, leading to gaps in domestic production. 

Module Capacity Expands Faster 

Operational solar module capacity has reached about 144GW and is expected to rise to nearly 180GW by FY30, based on data from the Ministry of New and Renewable Energy (MNRE). In comparison, domestic cell manufacturing capacity stands at around 23.4GW. 

The report said the difference between module and cell capacity points to uneven growth, with final assembly moving ahead of upstream manufacturing. 

Output Above Installations 

Annual solar installations in India are estimated at 45-50GW, while module output is expected to be around 60-65GW. This shows that the supply in the module segment is higher than near-term demand. 

US tariffs have also limited export opportunities, leading to excess modules being directed to the domestic market. The report noted that this has increased pressure on smaller and standalone module manufacturers and may lead to consolidation. 

Policy Measures May Shift Demand 

Policy steps could increase demand for upstream manufacturing. The ALMM List-II, which will include solar cells from June 2026, along with requirements for domestic cell usage, is expected to raise demand for locally produced cells. 

Manufacturers that build large-scale cell capacity ahead of others, possibly before FY28, may see improved demand visibility once these measures take effect. 

Read More: Budget 2026: Renewable Energy Gets Allocation of ₹32,914.7 Crore and PM Surya Ghar Receives ₹22,000 Crore! 

Conclusion 

The report said the sector’s next phase is likely to depend on stronger upstream capacity and better integration across the value chain, rather than further expansion in module manufacturing alone. 

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