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Key Points

India's solar sector is expanding rapidly with installations projected to hit 190 GW by 2027. This growth is driven by government incentives like the PLI scheme and favorable policies. However, declining export opportunities and upstream manufacturing gaps pose significant challenges. The industry must address cell manufacturing limitations and potential oversupply to maintain sustainable growth.

Key Points: India Solar Sector Faces 190 GW Oversupply Risk by 2027

  • Annual solar capacity additions to reach 40-50 GW to meet renewable targets
  • Module manufacturing capacity has expanded to nearly 100 GW in two years
  • Solar cell manufacturing remains below 30 GW creating upstream challenges
  • New ALMM-II rules mandate domestic cells for project eligibility from 2025
2 min read

Indian solar sector may face oversupply by 2027: SBI Capital

SBI Capital warns India's solar industry may face oversupply as installations hit 190 GW by 2027, driven by PLI schemes and export challenges.

"India's solar industry could face a potential oversupply as cumulative installations are expected to reach 190 gigawatts by 2027 - SBI Capital Report"

New Delhi, August 23

India's solar industry could face a potential oversupply as cumulative installations are expected to reach 190 gigawatts by 2027, according to a recent report by SBI Capital.

This concern arises due to a declining scope for exports following recent actions by the United States to roll back incentives for solar projects, the report noted.

According to the report, capacity additions are set to hover around 40-50 GW annually in the coming years to meet India's renewable energy targets, requiring a steady-state module manufacturing capacity of 100 GW.

Over the past two years, India's solar module manufacturing ecosystem has expanded significantly, reaching a capacity of nearly 100 GW.

This growth was driven by supportive government schemes such as the Production Linked Incentive (PLI) and the Approved List of Models and Manufacturers (ALMM), along with a favourable global policy environment. A 60 per cent year-on-year increase in solar installations in FY25 to 24 GW led to a surge in module demand, estimated at 50 GWdc.

The report further noted that despite this growth, challenges remain in upstream integration. While module manufacturing is mature, India's solar cell manufacturing capacity is still below 30 GW.

The report added that the introduction of ALMM-II is expected to support growth in this segment. Effective 31 August 2025, only projects using cells from approved domestic manufacturers will be eligible for procurement.

This includes projects under net metering and open access rules, which open the commercial and industrial (C&I) market to domestic players.

SBI Capital report highlights that cell capacity is expected to rise significantly, moving towards self-sufficiency in the medium term.

In the interim, the limited availability of domestically manufactured cells could raise project costs, potentially dampening bidding enthusiasm.

However, clarity around timelines and exemptions for 100 GW of projects bid out from December 2024 onwards is likely to ease near-term supply pressures.

The report also notes that India currently has a negligible presence in wafer and polysilicon production. Although there is a target to develop 40 GW of wafer capacity by March 2027, on-ground progress is modest.

Rising global polysilicon prices have squeezed margins for international manufacturers who are not fully integrated across the value chain.

In this regard, India's PLI program is noteworthy since it facilitates complete integration from polysilicon to modules, the report added.

- ANI

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Reader Comments

P
Priya S
The cell manufacturing gap is worrying. We're making modules but importing cells? That defeats the purpose of Make in India. Need more focus on complete value chain integration.
M
Michael C
Working in renewable energy sector here in Bangalore. The ALMM policy is good but implementation timing could be better. Many projects might face delays if cell capacity doesn't ramp up quickly.
S
Shreya B
At least we're thinking ahead! 190 GW by 2027 is ambitious but achievable. The PLI scheme has been a game-changer for domestic manufacturing. Solar energy is the future! 🌞
A
Arjun K
The real issue is upstream integration. We need to develop wafer and polysilicon manufacturing capabilities instead of just assembling modules. That's where the real value addition happens.
N
Nisha Z
Hope this doesn't lead to job losses in the solar sector. Many small manufacturers entered the market after government incentives. They need protection during this transition phase.
D
David E
The US policy changes were predictable. We should have diversified our export markets better. Southeast Asia and African countries have huge potential for solar exports from India.

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