India’s solar PV module manufacturing capacity reached 233GW by June 2026, but upstream capacity in cells, wafers, ingots and polysilicon remained far lower.
Module factories were operating at an estimated 35% to 40% utilisation, while another 135GW of capacity was planned or under construction.
New demand from data centres, green hydrogen and exports could add 17GW to 22GW by 2030, but may not be enough to absorb the expected surplus.
The report warned that smaller, non-integrated manufacturers and firms using older technologies could face consolidation or stranded assets.
India’s solar photovoltaic (PV) module manufacturing capacity reached 233 gigawatts (GW) by June 2026, but the expansion was overwhelmingly concentrated in modules, leaving significant gaps in upstream manufacturing, according to a new report.
Module manufacturing capacity was nearly seven times cell capacity and 116 times ingot and wafer capacity, highlighting a structural imbalance in India’s solar PV manufacturing ecosystem.
Module factories were operating at an estimated 35 per cent to 40 per cent utilisation, below the 50 per cent to 65 per cent considered necessary for sustainable operations. At the same time, another 135 GW of capacity was planned or under construction, according to the report, Assessing overcapacity risk in India’s solar PV manufacturing market, by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research.
The findings were significant as India sought to build a globally competitive and self-reliant solar manufacturing ecosystem, but capacity expansion had moved much faster than demand and upstream integration.
Policy support and strong domestic solar deployment had driven rapid manufacturing growth, particularly in modules. But the industry now faced low factory utilisation, a large mismatch between module, cell and wafer capacity, and dependence on a limited set of upstream inputs.
Operating profitability for domestic solar PV manufacturers was about 25 per cent in financial year 2025, but the report expected increasing competition and overcapacity to put pressure on selling prices and profitability. Smaller, non-integrated assemblers were likely to face a sharper decline in utilisation as competition intensified.
“India has added module capacity faster than the market can absorb it,” said Prabhakar Sharma, senior consultant at JMK Research and lead author of the report.
“With around 135 GW more already planned or under construction and factories running at 35-40 per cent, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets.”
The report identified data centres, green hydrogen and exports as the most credible sources of new demand for Indian solar modules.
Together, these segments could generate an additional 17 GW to 22 GW of demand by 2030, but the report said this would not be enough on its own to absorb the expected manufacturing surplus.
Data centres could generate around 2 GW to 3 GW of additional annual solar demand by 2030 as the sector’s electricity consumption increased.
Green hydrogen and ammonia could create another 8 GW to 10 GW of solar PV demand by 2030.
The National Green Hydrogen Mission targeted production of 5 million tonnes of green hydrogen a year by 2030, while the report considered a trajectory of about 3 million tonnes a year more realistic, given the current stage of projects already awarded.
The report said exports would therefore remain important in improving factory utilisation and absorbing some of the excess capacity.
India exported about 4.5 GW of solar modules in financial year 2026, but around 97 per cent of that volume went to the US. Exports to markets outside the US stood at only about 128 megawatts (MW), highlighting the concentration of India’s current export market.
Indian solar module exports to the US peaked at about $1.94 billion in financial year 2024 before falling by 44 per cent to 47 per cent over the following two years, according to the report.
The decline came amid tighter US trade measures, with preliminary determinations by the US Department of Commerce in February and April 2026 resulting in combined duty exposure of more than 200 per cent for most Indian manufacturers.
The report said manufacturers could reduce this vulnerability by diversifying into Europe, the Middle East and Africa, including by setting up manufacturing facilities closer to overseas demand centres to navigate import duties and local-content requirements.
“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,” said Charith Konda, lead energy specialist at IEEFA and contributing author of the report, along with Vibhuti Garg, director for South Asia at IEEFA.
Konda said access to new markets alone would not be enough, with sustained export growth depending on India closing the cost and technology gap with China through scale, integration and operational efficiency.
The concentration of manufacturing capacity in modules left India heavily dependent on the expansion of upstream segments such as cells, wafers, ingots and polysilicon.
The report’s figures showed the scale of the imbalance, with module capacity nearly seven times cell capacity and 116 times ingot and wafer capacity.
India had around 35 GW of cell manufacturing capacity, but nearly 33 GW was tied to integrated manufacturers for their own use, leaving only about 2 GW available to the wider market, according to the report.
The report expected cell manufacturing to expand under the Approved List of Models and Manufacturers (ALMM) List II, followed by wafer capacity from 2028.
Meaningful expansion in polysilicon capacity was expected only after 2030, with near-term development limited to a few Production Linked Incentive (PLI) scheme awardees with the financial and technical capacity to develop upstream manufacturing facilities.
“The challenge is no longer building capacity; it is using it well and deepening the value chain,” said Chirag H Tewani, senior research associate at JMK Research and co-author of the report.
Tewani called for incentives to be distributed across cells, wafers and polysilicon rather than being concentrated on modules. He also called for stronger collaboration between industry and researchers and targeted, time-bound support for exporters.
The report recommended restructuring incentives so that meaningful support was available for individual stages of the solar PV value chain, rather than requiring manufacturers to achieve full vertical integration to receive incentives.
It also called for greater collaboration between manufacturers and domestic research institutions as the industry shifted towards newer technologies such as heterojunction and perovskite-silicon tandem cells.
The expected capacity surplus was likely to affect manufacturers unevenly.
Small downstream-only assembly facilities, manufacturers relying predominantly on older Passivated Emitter and Rear Cell (PERC) technology and companies without a credible upstream integration strategy were identified as the most vulnerable.
JMK Research estimated that these categories together accounted for 45GW to 50GW of module capacity that could face consolidation or disruption in the near term.
Tunnel Oxide Passivated Contact (TOPCon) technology already accounted for more than 70 per cent of India’s module manufacturing capacity, increasing pressure on manufacturers still dependent on older PERC technology.
The report said manufacturers that combined scale, technological competitiveness, supply-chain integration and market diversification would be better placed to sustain utilisation and profitability as the gap between supply and demand persisted through 2030.
The report also pointed to India’s entry into the Pax Silica coalition as an opportunity to diversify silicon procurement and reduce dependence on China.
The initiative covered the wider silicon supply chain, including critical minerals, polysilicon and rare earth elements.
“India’s entry into the Pax Silica coalition is a real opportunity to diversify silicon inputs and cut its reliance on China,” said Pulkit Moudgil, senior research associate at JMK Research and co-author of the report.
The challenge of converting manufacturing ambitions into operational capacity was also visible in other clean-technology sectors.
A September 1 study by the International Council on Clean Transportation (ICCT) and the Tata Centre for Technology and Design at the Indian Institute of Management Bangalore found that India had about 1.4 gigawatt-hours (GWh) of operational battery cell manufacturing capacity as of June 2026, meeting less than 3 per cent of projected demand in 2032.
The announced pipeline of about 128GWh — comprising 50GWh targeted under the Production Linked Incentive Scheme for Advanced Chemistry Cell Battery Storage and about 78GWh from other announced automotive projects — could take battery localisation beyond 30 per cent by 2032 if the capacity was commissioned.
The ICCT study also found that battery localisation was critical to the employment gains from electric vehicle manufacturing, with the overall employment impact turning positive once domestic battery manufacturing crossed 25 per cent.
Under its most ambitious pathway, economic output linked to electric vehicles could rise from $12.8 bn in 2024 to $620 bn by 2040, while direct manufacturing employment could reach 4.3 million before accounting for additional jobs from battery cell localisation.