Solar module overcapacity drags factory utilisation down to 35-40%: Report

India's module capacity reached 233 GW in June, nearly seven times its cell capacity, leaving factories operating well below levels needed for sustainable operations

With India's solar module capacity at 233 gigawatts (GW) in June 2026, nearly seven times cell capacity and 116 times ingot-wafer capacity, module factories are running at an estimated 35-40 per cent utilisation, well below the 50-65 per cent needed for sustainable operations, according to a report released by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research on Tuesday.

 

With roughly 135 GW of further capacity planned or under construction, this imbalance is unlikely to ease by 2030, the report finds. It leaves upstream segments such as cells, wafers and polysilicon underdeveloped and the supply chain dependent on imported inputs, predominantly from China.

  

“The pressure on utilisation, margins and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets,” said Prabhakar Sharma, senior consultant at JMK Research.

 

India’s solar deployment is expected to grow strongly, with new demand of 17-22 GW by 2030 coming from data centres, green hydrogen and ammonia, and exports, with green hydrogen being the single largest avenue given the dedicated renewable capacity it requires, the report noted, adding that even then, it is unlikely to fully offset the planned scale of expansion.

 

The report also highlighted that exports will be pivotal. India’s export base is heavily exposed to the US, which absorbed around 97 per cent of module export volume in FY26. However, that channel has since been disrupted by combined US duties exceeding 200 per cent on most Indian manufacturers, which have cut exports to the US by 44-47 per cent from their FY24 peak. The European Union, whose recent supply-chain and sourcing rules increasingly reward diversification, now offers the most structured medium-term alternative, the study said.

 

“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. “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,” he added.

 

Smaller, non-integrated manufacturers will come under greater pressure, while larger, vertically integrated players are positioned to gain, according to the report.

 

“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.

 

“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.

 

The report also called for faster power transmission and right-of-way (RoW) clearances to sustain domestic deployment, and a framework to repower ageing solar assets.