India’s solar module manufacturing capacity is set to exceed 125 GW by 2025, over three times the domestic demand of roughly 40 GW leading to a potential inventory surplus of 29 GW, according to Wood Mackenzie.
This rapid surge has been powered by the government’s Production Linked Incentive (PLI) scheme, which has accelerated factory expansion across the solar value chain.
However, with exports to the U.S. falling 52% in H1 2025 — following the introduction of 50% reciprocal tariffs — concerns of overcapacity are growing. Several manufacturers have already paused U.S. expansion plans, shifting focus back to domestic projects.
While the PLI scheme has spurred massive growth, cost competitiveness remains a key challenge.
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Indian-assembled modules using imported cells are $0.03 per watt costlier than imported Chinese modules.
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Fully “Made in India” modules could cost up to twice as much without government support.
To safeguard local producers, the government is reinforcing protective measures such as:
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The Approved List of Models and Manufacturers (ALMM)
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A proposed 30% anti-dumping duty on Chinese modules
Experts believe India has the strongest potential to emerge as a large-scale alternative to China’s solar supply chain but long-term success hinges on R&D, next-gen technology, and export diversification into Africa, Latin America, and Europe.
According to CareEdge Advisory, India could reach 216 GW of solar capacity by FY28, supported by ongoing efficiency gains and integrated manufacturing from polysilicon to module stages.
“The challenge has shifted from building capacity to achieving cost competitiveness and expanding export markets,” — Yana Hryshko, Head of Solar Supply Chain Research, Wood Mackenzie.
India’s next step: move from expansion to excellence, building a globally competitive, sustainable, and innovation-led solar manufacturing ecosystem.
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