India's solar module manufacturing capacity to outpace demand in 3 years

CareEdge Ratings projects India's solar module and cell capacities at 200 GW and 100 GW by 2027-28, surpassing demand and shifting focus to exports

India’s domestic solar module and cell manufacturing capacities are expected to reach 200 gigawatt (GW) and 100 GW, respectively, by 2027-28, outpacing the annual domestic module demand of 50 GW over the next three years, according to a report by CareEdge Ratings.

 

By July 2025, India’s module manufacturing capacity had touched 118 GW, while cell capacity stood at 27 GW. However, effective operational capacity was estimated at 80–85 GW for modules and 11–13 GW for cells, with the remainder in the stabilisation phase.

 

“Consequently, annual production is estimated at 50–60 GWp for modules and 8–10 GWp for cells, resulting in an import dependency of 40–45 GWp for cells. This accelerated capacity expansion has been driven by increased solar installations, proactive policy support, and improved access to financing avenues,” the report said.

 

 

Surge in cell manufacturing

 

Domestic cell capacity is projected to reach 100 GWp by FY28, supported by capex exceeding ₹55,000 crore and increasing backward integration efforts. As a result, module production is likely to tilt toward exports, while cell output could also surpass domestic requirements in the medium term.

 

While pure-play module manufacturers could face consolidation pressures, integrated players are expected to withstand margin pressures due to cost efficiencies.

 

Export prospects and US policies

 

CareEdge noted that tightening policies in the United States could affect India’s module exports, but a relatively nascent US supply chain and progressive decoupling from China could benefit Indian firms. Margins for modules meeting US Domestic Content Requirement (DCR) criteria are nearly two to three times higher than domestic margins, it said.

 

GST rate cuts and tariff implications

 

The recent reduction in Goods and Services Tax (GST) rates could lower project costs by 4–5 per cent, reducing landed costs of non-DCR modules by 1.0–1.2 cents per Watt and DCR modules by 1.3–1.6 cents per Watt. This is expected to bring down plain vanilla solar tariffs by ₹0.06–0.10 per unit in the near term.

 

However, mandatory domestic cell procurement under the Approved List of Models and Manufacturers for solar cells (ALMM-II) is likely to push tariffs higher by ₹0.30–0.40 per unit from prevailing levels of ₹2.5 per unit, given the current price gap of 5–6 cents between DCR and non-DCR modules.