India`s solar module and cell capacity to touch 200 GWp and 100 GWp by FY28: CareEdge Ratings
According to CareEdge Ratings, India’s solar module and cell capacity are expected to touch 200 GWp and 100 GWp, respectively, by FY28 end, outpacing the annual domestic module demand of 50 GWp over the next three years. It notes that integrated players are likely to be more resilient to margin pressure, leading to consolidation of smaller module capacities.
As of July 2025, India’s module manufacturing capacity reached 118 GWp, while cell manufacturing capacity stood at 27 GWp. However, effective operational capacity is estimated at 80-85 GWp for modules and 11-13 GWp for cells, with the remainder in the stabilisation phase. Consequently, annual production is estimated at 50-60 GWp for modules and 8-10 GWp for cells, resulting in an import dependency of 40-45 GWp for cells. This accelerated capacity expansion has been driven by increased solar installations, proactive policy support, and improved access to financing avenues.
Domestic cell manufacturing capacity is projected to reach 100 GWp during the same period, with capex exceeding Rs 55,000 crore, driven by backward integration efforts. As a result, module production is likely to increasingly rely on exports, even as cell production is also likely to eclipse domestic demand in the medium term. While pureplay module players could be at risk of consolidation, integrated players are likely to withstand the margin pressure owing to cost efficiencies.
The report notes that tightening policies in the US could impact India’s module exports, although the medium-term outlook remains promising, provided Indian players manoeuvre compliance and maintain cost competitiveness. A relatively nascent supply chain in the US and progressive decoupling with China may bode well for Indian exporters in the medium term, given that the margins for modules complying with Domestic Content Requirement criteria (DCR modules) in the US market are nearly 2-3 times those of domestic margins.
The report highlights that the reduction in GST rates could lead to project cost savings of 4-5% owing to a reduction in landed costs of non-DCR and DCR modules by 1.0-1.2 cents/Wp and 1.3-1.6 Cents/Wp, respectively, potentially lowering plain vanilla solar tariffs by Rs 0.06-0.10 per unit in the near-term. However, it noted that mandatory domestic cell procurement under the Approved List of Models and Manufacturers for solar cells (ALMM-II) is likely to push plain vanilla solar tariffs higher by Rs 0.30-0.40 per unit from prevailing levels of Rs 2.5 per unit, given the prevailing price differential of 5-6 cents for DCR modules vis-à-vis non-DCR modules.
According to Jatin Arya, Director, CareEdge Ratings, “The solar equipment manufacturing sector has several tailwinds, including robust domestic demand outlook, maturing module capacities, favourable government policies, and improved financing avenues for the RE sector. However, nascent integration of solar equipment capacity, supply chain dependence on China, uncertainty shrouding export prospects, and lagging RE capacity additions due to systemic issues are some headwinds that remain monitorable over the medium term.”
CareEdge Ratings also notes that recent volatility in input prices driven by supply chain shifts in China underscores the need for further backward integration, which is being headlined by major Indian players with a wafer capacity pipeline of over 30 GWp, entailing a capex of over Rs 20,000 crore. Moreover, the Indian government proposes to provide another demand trigger with the implementation of ALMM-III for ingot/wafer capacity, effective from June 1, 2028.
“While domestic procurement mandates are crucial for incentivising backward integration in local manufacturing, policymaking needs to strike a balance between supply chain independence and energy security at competitive costs,” Arya added.
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