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Factories are operating below the 50% to 65% utilisation needed.
India’s solar photovoltaic (PV) manufacturing capacity has reached 233 gigawatts (GW), but module factories are running at 35% to 40% utilisation as capacity outpaces demand, a joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research said.
Despite moving from over 90% import dependence to become the world’s second-largest solar PV module manufacturer, the build-out is concentrated at the module stage, creating a structural gap across the solar supply chain.
Module capacity is nearly seven times cell capacity and 116 times ingot-wafer capacity.
Upstream segments such as cells, wafers, and polysilicon remain underdeveloped, leaving manufacturers dependent on imported inputs, mainly from China.
Factory utilisation is below the 50% to 65% level the report identifies as necessary for sustainable operations.
A further 135 GW of module capacity is planned or under construction, which could increase pressure on utilisation, margins, and returns.
The joint report said the imbalance between manufacturing capacity and demand is unlikely to ease by 2030.
Data centres, green hydrogen and ammonia, and exports could add 17 GW to 22 GW of demand by 2030, with green hydrogen expected to provide the largest source of new demand due to the dedicated renewable capacity it requires.
That demand will not be enough to absorb the planned expansion, leaving exports as a key outlet for Indian manufacturers.
The US accounted for around 97% of India’s solar module export volume in the financial year (FY) 2026, but combined US duties exceeding 200% on most Indian manufacturers have disrupted that market, with exports to the US falling 44% to 47% from their FY2024 peak.
The EU offers an alternative market as its supply-chain and sourcing rules increasingly favour diversification.
“India may have the opportunity to unlock new export markets, provided Indian solar PV manufacturers can effectively compete with Chinese manufacturers by investing in R&D and the manufacturing of polysilicon, ingots, wafers, and cells,” said Charith Konda, Lead Energy Specialist at IEEFA and a contributing author of the report.
Konda said market access alone will not be enough, as sustained export growth depends on closing the cost and technology gap with China through scale, integration, and operational efficiency.
The supply imbalance is expected to put smaller, non-integrated manufacturers under greater pressure, whilst favouring larger, vertically integrated players.
The industry is also expected to move upstream into cells, wafers, and polysilicon, reducing reliance on imported inputs.
“The challenge is no longer building capacity; it is using it well and deepening the value chain,” said Chirag H. Tewani, Senior Research Associate at JMK Research and a report co-author.
The report recommends spreading incentives across cells, wafers, and polysilicon, strengthening industry-research collaboration, and providing targeted, time-bound support for exporters.
It also calls for faster power transmission and right-of-way clearances to support domestic solar deployment, alongside a framework to repower ageing solar assets.
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