India’s solar manufacturing sector is facing a paradoxical crisis: its own success is now its biggest challenge. What began as a bold push to boost local production—driven by pandemic disruptions and strained ties with China—has spiraled into a massive oversupply. Since 2020, capacity has skyrocketed 13-fold, according to BloombergNEF, far outpacing domestic demand. But here’s where it gets controversial: while this surge was celebrated as a win for energy independence, it’s now raising alarms about sustainability and market balance.
The government, sensing trouble, urged banks late last year to tread carefully when lending to the sector. Meanwhile, manufacturers are scaling back on lower-value production, signaling a shift in strategy. And this is the part most people miss: the glut isn’t just a temporary hiccup—it’s structural, warns Avinash Hiranandani, managing director of RenewSys India Pvt. Ltd. Capacity utilization at module-assembly plants has plummeted to around 40%, down from over 70% in March 2023, when U.S. exports were booming before punitive tariffs hit.
India’s journey to self-reliance began in earnest after 2020, when it imported roughly 80% of its solar modules. The pandemic exposed vulnerabilities in global supply chains, prompting policymakers to double down on domestic manufacturing. Taxes on imported cells and modules were introduced, and a list of approved homegrown manufacturers effectively shut out Chinese competitors. Investors poured in, betting on India’s energy transition and surging U.S. demand. But the rapid expansion has outstripped both domestic and international markets.
Here’s the kicker: while India has reduced reliance on Chinese modules, it still depends on China for upstream components like cells and wafers. New mandates aim to change that—from June, all modules sold in India must use locally made cells, with similar rules for wafers by 2028. But this could exacerbate the glut. Cell-manufacturing capacity is projected to quadruple to 100 gigawatts by 2026, according to ICRA Ltd. Sameer Gupta of Jakson Ltd. warns that capacity coming online post-2027 may struggle to find buyers.
“Cell prices are high now due to local shortages, but they’ll crash once overcapacity hits,” Hiranandani predicts. “Mid-sized companies will bear the brunt—many won’t recover their investments.” India’s domestic demand, though growing, hasn’t kept pace. In 2025, the country installed a record 38 gigawatts of solar power, but manufacturing capacity stood at a staggering 154 gigawatts by year-end.
Exports, once a lifeline, have been stifled by U.S. tariffs and anti-dumping investigations. The Alliance for American Solar Manufacturing and Trade is pushing for duties of up to 214% on Indian imports. Is this protectionism or fair trade? The debate is heating up, and India’s solar industry is caught in the crossfire.
One solution? Look beyond traditional markets. Rishabh Jain of the Council on Energy Environment and Water suggests emulating China by leveraging the Export-Import Bank of India to finance solar projects in regions like Africa, with a mandate to use Indian-made modules. “It’s time to think globally,” Jain urges.
But not all players will survive. As technology evolves, less-advanced companies will struggle to keep up with costly upgrades. Prashant Mathur of Saatvik Green Energy notes that nearly 30 gigawatts of India’s module capacity relies on MonoPERC cells, now becoming obsolete. “Eventually, only the big players will dominate,” he says. “There’s no doubt about that.”
So, here’s the question for you: Is India’s solar glut a temporary growing pain or a warning sign of deeper systemic issues? And what role should global markets play in absorbing this excess capacity? Share your thoughts below—let’s spark a conversation!
