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India’s renewable energy capacity, including large hydro, has expanded at a compound annual growth rate of roughly 12% since March 2014, reaching 296 GW as of August 2026 and accounting for about 53% of total power generating capacity, according to pv magazine. The growth has been driven by supportive policy and improving tariff competitiveness, with solar power leading the way as installed capacity rose from under 3 GW in March 2014 to 168 GW in August 2026.
Anticipating continued demand, India’s solar photovoltaic module manufacturing capacity grew from less than 20 GW in 2022 to 217 GW as of August 2026. This expansion was aided by policy measures, notably the approved list of models and manufacturers, which curbed direct imports of solar modules.
Operational module capacity, however, trails installed capacity because some facilities still rely on older polycrystalline and monoPERC technologies and lower-wattage modules that no longer match market demand, which now favors TOPCon and heterojunction modules.
Even after accounting for lower operational capacity, annual solar module production is expected to exceed the projected annual solar installation of 55-60 GWdc. Uncertainty over U.S. tariff measures has diverted modules from export markets into the domestic market, adding to supply pressures. The resulting overcapacity in module production is likely to speed up consolidation in the module manufacturing industry, with smaller, pure-play module makers most affected.
Just as the approved list of models and manufacturers supported module capacity growth, its extension to solar photovoltaic cells from June 2026 has accelerated investment in cell capacity. Cell manufacturing capacity rose from 13 GW in July 2025 to 35 GW as of August 2026 and is expected to reach 100 GW by December 2027.
Cell manufacturing is more capital intensive, requiring INR 400-500 crore per GW of investment versus INR 80-90 crore per GW for module manufacturing. It is also more challenging technologically and depends on imported equipment. Geopolitical uncertainties affecting equipment sourcing, along with plant stabilization issues after commissioning, could delay cell capacity additions across players.
Further upstream, ingot, wafer and polysilicon manufacturing is more technologically complex than module and cell production. An approved list of models and manufacturers for solar wafers, which would require manufacturers to have equivalent ingot capacity, is proposed to take effect from June 2028, but it will not be issued unless at least three wafer manufacturing units with combined capacity of 15 GW per annum exist.
One player has completed an ingot and wafer facility of 2 GW, yet overall progress on wafer and polysilicon capacity remains slow despite plans announced by large players. Without policy support such as the approved list of models and manufacturers, domestically manufactured components are unlikely to compete with Chinese imports. This reflects the technological complexity of ingot and wafer manufacturing, along with challenges in process know-how and technology transfer. High capital and operational costs of setting up plants are additional hurdles for the polysilicon and wafer segment.
The pace of domestic ingot and wafer capacity addition therefore remains uncertain, though vertically integrated manufacturers are expected to benefit over the long term from greater supply chain control.
Based on prevailing imported cell prices and operating costs for domestic original equipment manufacturers, the landed cost of modules from domestic OEMs using imported solar photovoltaic cells is 13-15 cents per watt. Given significant module capacity additions, these prices have come under pressure, hurting profitability for standalone module manufacturers.
Manufacturing solar photovoltaic cells in India costs more than importing them, so modules made with domestic cells cost 21-23 cents per watt. As a result, capex for solar plants is likely to rise by around 15-17%, pushing solar tariffs higher going forward.
Domestic cell manufacturers currently benefit from limited domestic capacity, earning relatively higher margins than standalone module manufacturers and commanding higher prices for modules made with domestic cells. Both margins and prices are expected to moderate over the medium term as additional cell capacity is commissioned and manufacturers achieve scale efficiencies. However, the implementation of approved list requirements for wafers from June 2028 could partially offset that moderation by raising module prices, increasing project costs and exerting upward pressure on solar power tariffs.
The views expressed in the source article are those of the author and do not necessarily reflect those held by pv magazine.
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