India’s solar module manufacturing capacity has surged to 233 GW, making it the world’s second-largest manufacturing base, but factories are operating at only 35-40% utilisation, well below the 50-65% level required for sustainable operations, raising the risk of consolidation and stranded assets as another 135 GW of capacity comes up.
The capacity-demand mismatch is unlikely to ease through 2030 despite strong growth in solar installations, according to an IEEFA-JMK Research assessment. Module capacity is already nearly 7 times cell manufacturing capacity and 116 times ingot-wafer capacity, leaving the upstream supply chain dependent largely on imported inputs, predominantly from China.
“India has added module capacity faster than the market can absorb it,” Prabhakar Sharma, senior consultant at JMK Research, said. “With around 135GW more already planned or under construction and factories running at 35-40%, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets.”
The build-up has far outpaced demand growth. Between FY22 and FY25, annual solar installations increased from around 13 GW to over 30 GW, while module manufacturing capacity expanded from about 38 GW to more than 90 GW. Module facilities require roughly ₹150-170 crore per GW and can be commissioned within 8-15 months, compared with ₹500-700 crore per GW for cell plants.
Demand has also weakened at the utility-scale end. Renewable energy tenders fell about 47% to 24 GW in FY26, from nearly 45 GW in FY25, amid delays in land acquisition, grid connectivity and power supply agreements.
Exports, another key outlet for domestic modules, face growing pressure. India exported about 4.5 GW of modules in FY26, of which the US accounted for nearly 97%. Exports to the US have fallen 44-47% from their FY24 peak, while preliminary US duties have pushed combined duty exposure above 200% for most Indian manufacturers.
New demand from data centres, green hydrogen and exports could add 17-22 GW annually by 2030, but would still be insufficient to absorb the planned manufacturing expansion. Green hydrogen alone could create an incremental 8-10 GW opportunity, while data centres may generate another 2-3 GW of annual solar demand by the end of the decade.
The pressure could force industry consolidation. Around 45-50 GW of module capacity, largely comprising small-scale assemblers, older PERC-based lines and companies without upstream integration plans, is considered vulnerable to disruption, acquisition or exit.