India’s solar manufacturing sector is facing a paradoxical crisis: its own success has become its greatest challenge. What began as a strategic push to bolster local production—driven by pandemic disruptions and geopolitical tensions with China—has spiraled into a massive oversupply. Since 2020, the country’s solar manufacturing capacity has skyrocketed 13-fold, now nearly tripling domestic demand, according to BloombergNEF. But here’s where it gets controversial: this boom has turned into a glut, leaving manufacturers scrambling to adapt.
The government, sensing trouble, urged banks late last year to exercise caution when lending to the sector. Meanwhile, manufacturers are scaling back on lower-value production, signaling a shift in strategy. But is this enough to prevent a looming crisis?
Capacity utilization at India’s module-assembly plants has plummeted to around 40%, down from over 70% in March 2023, a period when exports to the U.S. were thriving before punitive tariffs took effect. Avinash Hiranandani, managing director of RenewSys India Pvt. Ltd., bluntly states, “This is not a slowdown. It’s a structural glut.” And this is the part most people miss: the glut isn’t just a temporary hiccup—it’s a systemic issue rooted in overambitious expansion.
Until 2020, India imported roughly 80% of its solar modules. The pandemic and supply chain disruptions reignited policymakers’ long-standing goal of building domestic capability. The government introduced import taxes on cells and modules and created an approved list of homegrown manufacturers, effectively sidelining Chinese suppliers. The results were immediate: domestic module capacity surged as investors bet on India’s energy transition and booming U.S. demand.
However, India still relies on China for upstream components like cells and wafers. New mandates aim to change this: from June, all modules sold in India must use locally made cells, and similar requirements for wafers are set to begin in 2028. Cell-manufacturing capacity is projected to quadruple to 100 gigawatts in the next two years, according to ICRA Ltd. But here’s the catch: this could create another glut, warns Sameer Gupta of Jakson Ltd. “Capacity coming online after 2027 may struggle to find a market,” he adds.
Is India’s solar manufacturing sector digging its own grave? Hiranandani warns that cell prices, currently high due to local shortages, will crash once overcapacity hits. “Many mid-sized companies will find it difficult to recover their investments,” he predicts. “It will break their backs.”
Domestic demand hasn’t kept pace with production. While India installed a record 38 gigawatts of solar power in 2025 (53 gigawatts in DC terms), this pales in comparison to the 154 gigawatts of manufacturing capacity by year-end. Exports, once a lifeline, have been crippled by U.S. tariffs and anti-dumping investigations. The Alliance for American Solar Manufacturing and Trade is pushing for a staggering 214% duty on Indian imports, adding to the uncertainty.
One proposed solution? Expanding global reach. Rishabh Jain of the Council on Energy Environment and Water suggests emulating China by leveraging the Export-Import Bank of India to finance solar projects in regions like Africa, with a mandate to use Indian-made modules. “It’s time to think more globally,” Jain urges.
In the short term, not all players will survive. As technology evolves, less-advanced companies will struggle to keep up with costly upgrades. Prashant Mathur of Saatvik Green Energy points out that nearly 30 gigawatts of India’s module capacity relies on MonoPERC cells, which are becoming obsolete. “Eventually, it’s going to be a big boys’ club,” Mathur says. “There’s no doubt about that.”
But is this consolidation inevitable, or can smaller players innovate their way out? What role should the government play in balancing growth and sustainability? And as India navigates this glut, could it inadvertently stifle its own green energy ambitions? The answers to these questions will shape not just India’s solar future, but its global standing in the renewable energy race. What do you think? Share your thoughts in the comments below.
