Crisil Ratings expects India’s solar cell manufacturing capacity to go through a 5-fold increase by FY 2027
From 10 GW at the end of FY 2024, it is likely to reach between 50 GW and 55 GW
The government’s supportive policy framework to boost local manufacturing and reduce imports are helpful factors
A Crisil Ratings study of 4 domestic solar cell manufacturers in India shows that the country’s solar cell manufacturing capacity is likely to reach 50 GW to 55 GW by FY2027. This will be a 5-fold increase from 10 GW at the end of FY 2024. These 4 manufacturers accounted for 54% of the country’s total cell capacity as of March 31, 2024.
This expansion, it says, will entail a capital expenditure of INR 280 billion to INR 300 billion ($3.19 billion to 3.42 billion). It will be funded through a 70:30 debt-equity mix. “That said, healthy balance sheets and robust cash accrual will support credit quality,” add the Crisil analysts.
The major thrust to this manufacturing expansion is coming from the government’s focus on reducing imports of cells and modules to support the domestic industry. This will boost the backward integration into the expansion strategies of the module manufacturers, which will promote cell capacity addition.
Crisil explains that the country’s module imports have dropped to 25% of the total consumption this fiscal from 45% in the previous year, thanks to the module production capacity that went up from 7 GW in March 2020 to 60 GW by March 2024.
India, however, continues to remain heavily dependent on Chinese cell supply since its domestically produced cells are expected to be 80% to 90% pricier than imported cells. Crisil attributes this price difference to the lower economies of scale in India and dumping by China.
This could change in the future as the proportion of domestic module capacity made using domestic cell capacity is expected to increase to more than 50% from less than 15% in fiscal 2024 owing to government measures like the Production Linked Incentive (PLI) scheme, domestic content requirement, and also the upcoming Approved List of Models and Manufacturers (ALMM) List II for domestically produced cells (see India To Impose ALMM For Solar Cells From June 1, 2026).
Crisil believes continued policy support in the form of non-tariff barriers such as ALMM is crucial for Indian manufacturers to ensure continued demand for local cells and modules.
Analysts count these measures to have led to cell capacity announcements of 45 GW to 50 GW that will expand the country’s cell making capacity to around 55 GW over the next 2 fiscals.
“With domestic cell supply inadequate, import dependence could rise given likely renewable capacity addition. Crisil Ratings expects 60-65 GW of solar capacity to be added over the two fiscals by 2027,” according to the ratings agency.
.png?w=50&fm=png){kind=logo}