India is gearing up for a major leap in solar module manufacturing, with capacity projected to surpass 165 gigawatts (GW) by March 2027, according to credit rating agency ICRA. This expansion is fueled by government policy support, growing domestic demand, and a strategic push for greater vertical integration in the solar value chain.
Currently, India’s module-manufacturing capacity stands at roughly 37 GW, while cell-manufacturing capacity remains far smaller. By 2025, module capacity is expected to exceed 60 GW, with the production-linked incentive (PLI) scheme and other policy measures helping the sector approach 100 GW in the following years. If the rollout proceeds as planned, the country could reach the 165 GW milestone by 2027.
Policy support is central to this growth. Measures such as the Approved List of Models & Manufacturers (ALMM), basic customs duties on imported modules and cells, and the PLI program are designed to strengthen local manufacturing while reducing dependence on imports. These initiatives also aim to encourage domestic investment in higher-end manufacturing and support the creation of an integrated supply chain.
Demand dynamics further reinforce the expansion. India’s ambitious solar targets, underlined by its commitment to clean energy and decarbonization, are creating a strong and expanding market for modules. ICRA notes that domestic absorption will be a key determinant of how well the sector handles the increasing capacity.
However, risks remain. Overcapacity is a potential concern if module production outpaces domestic and export demand, which could put pressure on profit margins. Upstream dependency is another challenge, as India still relies heavily on imported polysilicon, wafers, and other components, most of which are produced in China. Additionally, modules manufactured with domestically produced cells currently carry a cost premium, highlighting the importance of scale and technological efficiency.
Vertical integration emerges as a crucial differentiator. Manufacturers that combine cell and module production are better positioned to navigate margin pressures and benefit from government policies. For project developers and investors, sourcing modules from ALMM-approved domestic manufacturers not only ensures regulatory compliance but also strengthens supply-chain resilience.
Beyond commercial considerations, the expansion of India’s solar manufacturing sector carries broader strategic benefits. It supports national energy security, generates employment opportunities, and contributes meaningfully to the country’s climate-action goals. With careful execution, India could emerge as a significant global hub for solar manufacturing, shaping the renewable energy landscape in the years ahead.