Tariffs imposed by the United States on solar imports have severely impacted Indian solar module exporters, forcing them to divert shipments to the domestic market, according to ICRA. The move has intensified the existing oversupply, putting pressure on prices and margins while accelerating consolidation among smaller players.
ICRA projects India’s solar PV module manufacturing capacity to soar to over 165 GW by March 2027, up from around 109 GW currently, driven by policies such as the ALMM, basic customs duty, and PLI scheme. However, with annual installations expected at only 45–50 GW, the country faces a significant capacity overhang.
Operating margins, which stood at about 25% in FY2025, are expected to moderate amid heightened competition. The report warns that modules redirected from exports are flooding the domestic market, squeezing smaller manufacturers and favouring vertically integrated firms.
While India expands its solar ecosystem, China still dominates the global supply chain, producing over 90% of polysilicon and 80–85% of cell and module capacity. The upcoming ALMM List-II, effective June 2026, is set to boost domestic cell production to about 100 GW by December 2027, though locally made modules could cost 3–4 cents per watt more than those using imported cells.
ICRA concludes that despite near-term challenges, integrated players may emerge stronger through better supply chain control and reduced import dependency.
