New Delhi: India has built more solar module capacity than its market can absorb, and roughly 135 gigawatts (GW) more is already planned or under construction, according to a report released on September 1 by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research. The country's module factories are running at an estimated 35 to 40 percent utilisation, against the 50 to 65 percent the report says manufacturers need to operate economically.
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The imbalance sits almost entirely at one stage of the supply chain. India's solar photovoltaic (PV) module nameplate capacity reached approximately 233 GW by June 2026, which the report puts at nearly seven times the corresponding cell capacity and 116 times ingot-wafer capacity. Cells, wafers and polysilicon remain underdeveloped, leaving the chain dependent on imported inputs, predominantly from China.
"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 135GW more already planned or under construction and factories running at 35-40 percent, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets."
The report traces the concentration to capital costs and to the sequencing of domestic content rules. A module plant needs about Rs 150 crore to Rs 170 crore per GW and can be commissioned in eight to 15 months. A cell plant needs Rs 500 crore to Rs 700 crore per GW, and an integrated ingot-wafer facility upwards of Rs 700 crore to Rs 1,000 crore per GW, with commissioning timelines of 18 to 24 months.
Policy pushed in the same direction. List I of the Approved List of Models and Manufacturers (ALMM), covering modules, was operationalised in March 2021 and remained the only binding domestic content requirement for nearly five years. List II for cells was notified in July 2025 and became operational in June 2026, while List III for wafers is proposed for 2028.
"This staggered rollout created a one-sided demand pull for modules, while cells continued to compete against lower-cost imports, directing investment toward the only segment with assured offtake," the report says. Its summary of the period is blunter still. "The low capital-threshold and simple execution of module assembly enabled rapid capacity creation, but at the cost of vertical integration, leaving upstream segments critically underdeveloped."
Domestic demand has not kept pace either. Against an annual renewable energy bidding target of 50 GW, tenders were issued for approximately 24 GW in FY2026, down from nearly 45 GW in FY2025. The report attributes the slowdown to delays in land acquisition, grid connectivity constraints and power supply agreement execution.
Data centres, green hydrogen and exports offer the most credible sources of demand beyond conventional deployment, together worth an incremental 17 to 22 GW annually by 2030 on JMK Research's estimates. Green hydrogen is the largest single avenue at 8 to 10 GW, because production requires dedicated renewable capacity rather than grid supply, with each million metric tonnes per annum of output estimated to need 25 GWac of dedicated renewable energy.
Data centres account for a further 2 to 3 GW. Information technology sector load is projected to rise from approximately 1.5 GWac in 2025 to 7 to 8 GWac by 2030, taking annual electricity consumption from around 13 terawatt hours to between 40 and 57 terawatt hours.
Even taken together, the report finds this is unlikely to offset the planned scale of expansion. It expects India's installed solar capacity to reach 280 to 300 GW by 2030, and concludes that module overcapacity will persist through the decade.
India exported approximately 4.5 GW of modules in FY2026, worth about USD 1 billion, with the United States accounting for around 97 percent of volume. Outside the US, the export base is around 128 megawatts, concentrated in Bangladesh, the UAE and Kenya.
That channel has tightened. Exports to the US peaked at approximately USD 1.94 billion, or Rs 18,330 crore, in FY2024, and contracted 44 to 47 percent over the two years that followed. Preliminary determinations by the US Department of Commerce in February and April 2026 left most Indian manufacturers facing combined duty exposure above 200 percent. Final determinations, originally scheduled for July, have been deferred to October 2026, and the report notes the eventual duty position will depend in part on ongoing India-US trade negotiations.
The report identifies the European Union as the most structured medium-term alternative, citing its Net-Zero Industry Act, Foreign Subsidies Regulation and Forced Labour Regulation as measures that reward supply-chain traceability over price alone.
"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 a contributing author. "But market access alone will not be enough. Sustained export growth depends on closing the cost and technology gap with China through scale, integration, and operational efficiency."
On cost, the gap between Indian and Chinese module prices has narrowed by roughly 28.6 percent from its 2024 level. On technology, mainstream Chinese Tunnel Oxide Passivated Contact (TOPCon) modules operate at the upper end of the 24 percent efficiency band while leading Indian TOPCon lines run at 22 to 23 percent. "The gap can be filled through technology partnerships, R&D investment, and the move toward larger and more vertically integrated Indian operations, but it will not close on policy support alone," the report says.
The timing of any upstream investment is helped by conditions in China. The top five Chinese module producers reported combined net losses exceeding USD 4 billion to USD 4.7 billion, or Rs 37,800 crore to Rs 44,415 crore, in 2025 on the back of oversupply, while Indian manufacturers stayed profitable through 2025 and the first quarter of 2026.
The report identifies 45 to 50 GW of module capacity as prone to consolidation, covering small downstream-only assembly units, lines still based on Passivated Emitter and Rear Cell (PERC) technology, and manufacturers without a credible upstream integration roadmap. TOPCon now accounts for over 70 percent of India's module manufacturing capacity. For the vulnerable group, "the path forward will likely narrow to strategic divestment, scaling back operations, or acquisition by Tier 1 manufacturers," the report says.
A second constraint has appeared at the cell stage. Of roughly 35 GW of cell manufacturing capacity, nearly 33 GW is tied to integrated companies for captive use, leaving about 2 GW for the merchant market. "This results in a structurally constrained merchant cell market despite significant addition in domestic capacity," the report says. The Ministry of New and Renewable Energy's exemption for net-metering and open-access projects, which runs to December 31, gives standalone module makers additional time while domestic cell supply scales.
Its recommendations centre on redistributing support across the value chain. The current Production-Linked Incentive framework rewards manufacturers by integration level, and the report argues for restructuring incentives at the component level so that upstream investment does not depend on achieving full vertical integration.
"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," said Chirag H Tewani, Senior Research Associate at JMK Research and a co-author.
On inputs, the report points to India's membership of the US-led Pax Silica coalition, joined in February 2026, which coordinates supply across 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 a co-author.
The report also calls for time-bound right-of-way clearance mechanisms and faster transmission build-out to sustain domestic deployment, and a dedicated framework to repower early-generation solar projects.
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It ends by placing the surplus in a longer frame. "Current module overcapacity should therefore be viewed as a transitional feature of a rapidly expanding industry, resolvable through demand absorption and consolidation," the report says, adding that "similar supply-demand dynamics are likely to emerge in cells and wafers as investment moves upstream."
