India’s Solar Manufacturing Push Faces New Challenges Beyond Capacity Expansion

India’s solar manufacturing ambitions are entering a more complex phase as rapid capacity additions begin to outpace domestic demand and global market conditions grow increasingly challenging. Opening the market overview session at the TaiyangNews Solar Technology Conference India 2026, Michael Schmela, Managing Director of TaiyangNews, noted that assumptions around China’s solar market remain highly uncertain despite continued record installations, highlighting the volatility shaping global supply-demand dynamics.

Speakers from EUPD Research, Wood Mackenzie, and Rystad Energy said India’s emergence as a major manufacturing hub will depend on more than scale expansion. Manufacturers must improve technology, localize upstream supply chains, and diversify exports beyond a narrow set of overseas markets.

While analysts agreed that India is well-positioned to benefit from global supply-chain diversification, they stressed that strategic upgrades will be essential. Much of the discussion focused on the risks of overcapacity, export concentration, and margin pressures if India fails to strengthen its long-term competitiveness.

India’s Capacity Expansion & Overcapacity Outlook

According to Rajan Kalsotra, Senior Consultant, EUPD Research, India’s solar manufacturing buildout is accelerating faster than domestic demand growth. He said the country is expected to install around 250 GWdc of solar between 2026 and 2030, averaging roughly 50 GW annually. Against this, current manufacturing capacity already stands at around 144 GW for modules, 27 GW for cells, and 2 GW for wafers, while announced module capacity could rise to 190 GW by 2027 and 280 GW by 2030.

Using a 70% utilization assumption, EUPD estimates that India could produce around 133 GW of modules in 2027 against a domestic demand of only 41 GW, implying a surplus capacity of 104 GW. Even at 65% utilization, considered breakeven by EUPD, surplus capacity would remain substantial.

Export Dependence and Market Diversification Need

According to Kalsotra, India is transitioning from a domestic substitution market to an export-dependent manufacturing hub. With domestic installations unable to absorb planned manufacturing output, Indian suppliers will increasingly need to rely on overseas markets.

At present, however, India’s export base remains narrow. Of the country’s 2.9 GW module exports in the first 3 quarters of 2025, 2.8 GW went to the US, highlighting heavy dependence on a single destination. EUPD warned that this concentration exposes Indian manufacturers to market-specific risks and limits long-term strategic resilience.

Competitive Positioning: US vs. Europe

Kalsotra said the US market is becoming less favorable for Indian exporters due to tariff increases and growing domestic manufacturing capacity. Following tariff adjustments, Indian module landing price in US rose from $0.288/W to $0.331/W, weakening competitiveness versus Southeast Asian suppliers.

Europe was presented as a more strategic export market. EUPD estimates freight costs for Indian module shipments to Europe at around $0.0045/W, or roughly 5% of module price, compared to 8.7% for Chinese shipments. Indian suppliers also benefit from approximately 65% lower freight-related emissions into Europe versus China, which could improve positioning under CBAM and ESG-focused procurement frameworks.

However, he said Indian manufacturers still trail Chinese Tier-1 suppliers in key competitiveness metrics – technology, efficiency, upstream integration and ESG metrics.

India Must Move Upstream As Module Capacity Nears Overbuild

Sureet Singh, Market Analyst at Wood Mackenzie, outlined both near-term export opportunities and structural challenges for Indian manufacturers. He said India’s next manufacturing challenge is no longer module capacity alone, but the development of a deeper upstream supply chain. India must increasingly focus on polysilicon, wafers, and technology localization if it wants to emerge as a sustainable manufacturing alternative to China.

Singh said India’s upstream supply chain remains heavily dependent on Chinese polysilicon, which currently supplies most of the global market outside the US While Chinese polysilicon remains the lowest-cost source, dependence on it may constrain Indian exporters seeking access to the US due to Uyghur Forced Labor Prevention Act restrictions. As an alternative, he points to Malaysia and the Middle East, particularly Qatar could be the  potential sources.

Looking further ahead, Singh argued India should consider granular polysilicon production using fluidized bed reactor (FBR) technology if it intends to build domestic upstream manufacturing. He said granular polysilicon offers lower cost, lower energy consumption, and lower carbon intensity compared with conventional rod polysilicon, making it better aligned with future sustainability and export requirements. According to Wood Mackenzie, granular silicon adoption is rising globally as wafer manufacturers increasingly adapt production lines to accept both rod and granular feedstock.

Export Opportunities Exist, But Indian Manufacturers Must Compete Strategically

On exports, Singh said India’s position in the US market remains uncertain despite the recent reduction in US tariffs on Indian solar modules from 50% to 18%. While the tariff rollback improves competitiveness, ongoing anti-dumping and countervailing duty investigations into imports from India, Indonesia, and Laos could continue through late 2026, creating regulatory uncertainty. He nevertheless said India remains in a stronger position than Southeast Asian competitors, given that Indian manufacturers are less exposed to allegations of Chinese subsidy circumvention.

Beyond the US, Singh sees growing export opportunities in Europe, Southeast Asia, and Africa. Europe was highlighted as a particularly important long-term market due to tightening supply-chain resilience requirements. Singh noted that Italy has become the first EU country to restrict Chinese solar equipment in certain public procurement projects by adopting resilience-based sourcing criteria, potentially creating opportunities for Indian suppliers. Wood Mackenzie expects other European markets, including Spain, France, the Netherlands, and Germany, to consider similar measures over time.

Southeast Asia and Africa were identified as the fastest-growing solar module import markets in 2025 and are expected to remain the primary near-term growth opportunities for Indian exporters in 2026.

However, Singh cautioned that Indian manufacturers cannot rely solely on geopolitical diversification trends to gain market share. To compete globally, manufacturers must invest in R&D and superior product technology. Singh said application-specific differentiation will be equally important, rather than continued pure capacity expansion. He recommended that Indian suppliers adopt a long-term strategic vision, arguing that India can compete with China globally only if it focuses on technology leadership, upstream integration, and value-added manufacturing rather than scale alone.

Global Solar Growth Faces First Slowdown Since 2018

According to Sushma Jagannath, Vice President, Renewables & Power at Rystad Energy, 2026 could mark the first year-on-year decline in global solar installations since 2018. She attributed this to mounting pressure from oversupply, curtailment, and weaker project economics across key solar markets. Jagannath said global solar growth is becoming increasingly uneven across regions, with mature markets confronting saturation challenges while emerging markets continue to expand.

 Module manufacturers continue to face pressure from commodity volatility and weak pricing conditions, she added. Silver prices have risen sharply, adding fresh cost pressure to production even as broader PV module costs have stabilized near late-2024 levels. At the same time, persistent oversupply and aggressive price competition continue to weigh on margins, with several major Chinese module suppliers reporting negative net income margins.

Jagannath also highlighted rising curtailment across major solar markets, noting that China is expected to reach solar saturation in 2025, while India may face similar conditions as early as 2026, increasing the need for storage deployment and grid flexibility. Despite these headwinds, she said India’s power demand remains robust, with electricity consumption projected to exceed 2,000 TWh by 2030. Solar generation is expected to contribute more than 500 TWh, supported by favorable policy measures including increased budget allocations and tax benefits for domestic manufacturing inputs.