From pv magazine India
ICRA has warned that India’s solar manufacturing sector is likely to face an overcapacity scenario, with annual solar capacity additions projected at 45 GW to 50 GW (DC) against an annual module production capacity of 60 GW to 65 GW. The ratings agency said the imbalance is expected to spur consolidation among smaller or pure-play module manufacturers.
India’s solar module manufacturing capacity is projected to exceed 165 GW by March 2027, up from 109 GW at present. Growth is being driven by policies such as the Approved List of Models and Manufacturers (ALMM), the basic customs duty on imported cells and modules, and the production-linked incentive (PLI) scheme.
The upcoming implementation of ALMM List-II for solar PV cells from June 2026 has also accelerated expansion by module original equipment manufacturers (OEMs), with domestic cell manufacturing capacity expected to reach about 100 GW by December 2027, compared with 17.9 GW currently under ALMM.
ICRA said the recent imposition of US tariffs has negatively affected India’s solar export volumes, forcing manufacturers to redirect modules to the domestic market and intensifying pricing pressure.
“The operating profitability for ICRA’s sample set of domestic solar OEMs, which remained elevated at 25% in fiscal year 2025, is likely to moderate due to competitive pressures and overcapacity build-up,” said Ankit Jain, vice president and co-group head for corporate ratings at ICRA. “The recent imposition of tariffs by USA and the growing regulatory uncertainty in the USA are likely to dampen export volumes, potentially exerting pricing pressures on domestic OEMs.”
Jain said timely scale-up and stabilization of cell manufacturing will be critical once the ALMM requirement for solar cells takes effect in June 2026. He estimated that modules made with domestic cells will cost three to four cents per watt more than those made with imported cells.
All solar projects with bid submission deadlines before Sept. 1, 2025 – representing a 45 GW to 50 GW pipeline – will be exempt from the ALMM List-II requirement for domestic cells, even if commissioned after June 1, 2026.
“This will support the order book of OEMs without cell manufacturing capacity in the near term. Nevertheless, the bidding activity has slowed down in the last few months, which remains a key monitorable,” ICRA stated.
ICRA noted that China continues to dominate the global PV supply chain, accounting for over 90% of polysilicon and wafer capacity, more than 85% of cell capacity, and about 80% of module production. The agency said India’s dependence on Chinese suppliers for wafers and ingots leaves domestic OEMs exposed to geopolitical and technology-supply risks.
It added that each successive stage of backward integration requires higher technological sophistication and significant capital investment, increasing both implementation and stabilization risks for domestic manufacturers.
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