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Solar Module Oversupply Shifts Focus to Upstream Integration in India

A report by Elara Securities indicates a significant oversupply in India's solar module segment, creating a supply-demand mismatch as module capacity far outpaces annual installation targets. This oversupply is exacerbated by US tariffs limiting exports, putting pressure on smaller manufacturers and likely driving industry consolidation. The report urges a strategic pivot from rapid capacity expansion to backward integration, as upstream manufacturing of cells, wafers, and polysilicon remains critically underdeveloped. Upcoming policy mandates for domestic cells are expected to reshape demand, benefiting manufacturers who build large-scale cell capacity early.

Key Points: India's Solar Module Oversupply Spurs Upstream Integration Push

  • Module oversupply outpaces demand
  • Upstream cell & wafer capacity lags
  • Policy support may spike domestic cell demand
  • Industry consolidation likely for smaller players
2 min read

Solar module oversupply creates supply-demand mismatch, focus on upstream integration that is underdeveloped: Report

Report highlights solar module oversupply in India, urging focus on underdeveloped upstream manufacturing like cells and polysilicon for industry sustainability.

"Oversupply in module outstrips near term demand, pivoting India's solar module industry, from rapid capacity addition to backward integration and manufacturing maturity - Elara Securities Report"

New Delhi, February 11

Amid rising oversupply in the solar module segment in India, the industry should shift its focus from rapid capacity addition to backward integration and manufacturing maturity, as upstream segments such as cells, wafers, ingots and polysilicon remain relatively underdeveloped, according to a report by Elara Securities.

The report noted that oversupply in modules is outstripping near-term demand, pivoting India's solar module industry away from aggressive expansion towards strengthening the upstream value chain.

While module manufacturing has scaled up significantly, upstream segments continue to lag, creating structural imbalances within the ecosystem.

It stated, "Oversupply in module outstrips near term demand, pivoting India's solar module industry, from rapid capacity addition to backward integration and manufacturing maturity"

India's solar manufacturing capacity has expanded rapidly in recent years. Module capacity has reached around 144GW operational and is projected to touch approximately 180GW by FY30. In comparison, cell capacity stands at around 23.4GW, according to data cited from the Ministry of New and Renewable Energy (MNRE).

The report highlighted that annual solar installations in India may reach only 45-50GW, while module output stands at 60-65GW, resulting in a clear supply-demand mismatch and overcapacity concerns in the module segment.

US tariffs have further curbed exports, leading to excess supply being diverted into the domestic market. This has added pressure on smaller and pure-play module manufacturers, increasing the likelihood of consolidation in the sector.

The report also pointed out that policy support could reshape the demand outlook for upstream segments. The ALMM List-II, which will include cells from June 2026, along with mandates for domestic cells, is expected to spike demand for locally manufactured cells.

Manufacturers that build and stabilise large-scale cell capacity ahead of peers, potentially before FY28, are likely to benefit from the policy push and improved demand visibility.

The report highlighted that while India's solar module capacity has surged, concerns around overcapacity and supply-demand mismatch remain significant.

It stressed that the industry's next phase of growth should be driven by deeper integration across the value chain and strengthening of upstream manufacturing capabilities to ensure long-term sustainability.

- ANI

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Reader Comments

P
Priya S
Finally, someone is talking about the real issue. We are building too many modules without the raw material backbone. This oversupply will hurt our own manufacturers, especially the smaller ones. Focus should shift to R&D and high-tech upstream manufacturing now.
A
Aman W
The numbers are stark: 144GW module vs only 23GW cell capacity. We are putting the cart before the horse. This consolidation phase is necessary, but hope it doesn't kill innovation. The companies that invest in cells now will be the winners by FY28.
S
Sarah B
Interesting read. From a global perspective, many countries face similar value-chain imbalances. India's policy push for domestic cells could make it a more self-reliant player. The key will be achieving cost-competitiveness in polysilicon and wafer production.
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Vikram M
This is the classic Indian story – jumping on the assembly bandwagon without mastering the core technology. We did it with phones, now with solar. We need long-term vision, not just PLI schemes for finished goods. Backward integration is non-negotiable for energy security.
K
Kriti O
As someone working in the renewable sector, I see this daily. The oversupply is leading to cut-throat pricing and quality compromise. The report is correct – maturity and integration are more important than just capacity numbers. Hope policymakers are listening! 🙏

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