India set to become world’s No. 2 solar market; total capacity crosses 150 GW

According to technology and analytics firm Rubix Data Sciences, India improved its global ranking from ninth place in 2015 to third place in cumulative installed solar capacity by 2025. The sector has seen some near term challenges such as a steep tariff barrier from the US, India’s largest export market for solar modules, along with lower domestic demand compared to India’s manufacturing capacity and an increased dependence on China for photovoltaic (PV) cell imports. Despite these challenges, Rubix remains confident about the sector.

Rubix expects India’s solar capacity is expected to reach nearly 280–300 GW by 2030 to support the national target of 500 GW of non-fossil fuel capacity.

“Despite near-term competitive pressures and industry restructuring, India’s solar sector remains strongly positioned for long-term growth, supported by policy continuity, rising domestic demand, manufacturing expansion, and the country’s broader clean energy transition ambitions,” Rubix noted. 

India to diversify exports amid 200% US duties

The US market, which accounts for nearly 97% of India’s solar module exports, has become challenging after the country imposed a 123% anti-dumping duty and an additional 125% countervailing duty on Indian solar imports, taking the total tariff burden above 200%.

India’s solar module exports declined from a peak of $1.97 billion in FY24 to $1.12 billion in FY25. During April 2025-February 2026, exports stood at $1.02 billion, almost unchanged from the corresponding period a year ago.

Rubix expects Indian solar module exports to “diversify and seek alternative international markets” to tackle the steep tariffs.

ALMM push, backward integration to cut India’s reliance on China

Rubix noted that the sharp rise in solar installations and module manufacturing capacity has continued to drive imports, especially for PV cells, which surged to $2.72 billion during April 2025–February 2026. 

China continues to dominate India’s solar supply chain. China’s share in India’s solar PV cell imports stood at 65% in FY26, although this was down from 83% in FY25. 

Rubix expects that backward integration and complying with the government’s ALMM mandate will reduce import dependence and strengthen India’s solar supply chain. 

Under the Approved List of Models and Manufacturers (ALMM) framework across the solar value chain, government-backed projects will be required to use only ALMM-listed solar cells from June 2026, encouraging domestic cell manufacturing and reducing reliance on imported cells, which are still largely sourced from China. Taking this a step further, the government has introduced ALMM List-III for ingots and wafers, effective from June 2028, bringing upstream components under the localisation push.

Rubix also highlighted that major players including Adani Group, Tata Power Renewable Energy, Waaree Energies, Jakson Group and Solex Energy are investing billions of rupees in integrated facilities covering ingots, wafers, cells and modules. 

Solar overcapacity to accelerate consolidation 

India’s solar manufacturing industry is entering a phase where capacity expansion has significantly outpaced demand, increasing the likelihood of industry consolidation.

India added 119 GW of solar module manufacturing capacity and over 9 GW of cell capacity in 2025, taking total module capacity to around 210 GW and cell capacity to 27 GW. 

However, domestic demand is estimated at only 40–45 GW annually, creating substantial overcapacity across the sector. 

Module manufacturing capacity is now nearly four times annual demand. Module plant utilisation has reportedly fallen to around 40%, compared with more than 70% in FY23 when export demand from the US was strong.

Manufacturers are facing pricing pressure, lower capacity utilisation and the need to improve operational efficiency. 

Rubix believes this supply glut is likely to reshape the competitive landscape. “The emerging oversupply is beginning to reshape industry dynamics and competitive positioning.”

If excess capacity persists, Rubix expects consolidation to accelerate, with technologically advanced, vertically integrated players better positioned to survive.

Companies investing across the value chain, from ingots and wafers to cells and modules, are likely to gain market share, while smaller manufacturers and those operating older technologies may face margin compression, capacity rationalisation, mergers, or exits from the market.

Solar sector attracts strong foreign investment

Rubix’s optimism on India’s solar industry is backed by strong foreign investments in the sector.

In 2025 the foreign direct investment (FDI) in the solar sector was nearly $2.37 billion, accounting for more than 4% of India’s total FDI inflows and around 76% of FDI into the non-conventional energy sector.

Several large investments supported this trend. British International Investment invested $100 million in ReNew’s solar manufacturing business, while UAE-backed climate fund ALTÉRRA and Brookfield Asset Management committed $100 million to Evren Energy for renewable energy projects in India.

The government has also introduced faster FDI approvals for key solar manufacturing inputs such as polysilicon wafers and solar equipment, aiming to strengthen domestic supply chains.

What’s next for solar in India?

India added a record 44.61 GW of solar capacity in FY26, surpassing the government’s target of 34 GW, while still facing some near-term challenges. However, Rubix believes that several policy measures and PLI schemes are supporting the next phase of manufacturing growth. 

The government is pushing for solar adoption with schemes like PM Surya Ghar: Muft Bijli Yojana, which aims to provide rooftop solar power to one crore households by March 2027, and PM-KUSUM, which incentivises farmers to switch to solar power and generate supplementary income. 

The Union Budget significantly increased allocations for solar programmes. Funding for PM Surya Ghar rose from Rs 78.2 billion in FY25 to Rs 220 billion in FY27, while the allocation for PM-KUSUM nearly doubled to Rs 50 billion.