India's solar module manufacturing sector faces a severe overcapacity crisis, with factory utilisation dropping to 35-40% according to a joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research. As reported by the research firms, India's module capacity reached 233 GW in June 2026, creating an imbalance that is nearly seven times its cell capacity and 116 times its ingot-wafer capacity. This massive oversupply has left module factories operating well below the 50-65% utilisation needed for sustainable operations.
Despite the current oversupply challenges, India's solar deployment is expected to grow significantly, with new demand projected at 17-22 GW by 2030 from data centres, green hydrogen and ammonia production, and exports. According to the report, green hydrogen is expected to be the single largest avenue given its dedicated renewable capacity requirements. However, even with this strong projected growth, the planned scale of expansion is unlikely to fully offset the planned capacity additions, maintaining the current overcapacity pressures.
India's export strategy faces significant headwinds, with the US market absorbing around 97% of module export volume in FY26 but now disrupted by combined US duties exceeding 200% on most Indian manufacturers. As reported by the study, these duties have resulted in 44-47% reduction in exports from their FY24 peak levels. The European Union, which is implementing supply-chain and sourcing rules that increasingly reward diversification, now offers the most structured medium-term alternative for Indian manufacturers seeking to diversify their export markets.
The report identifies significant differences in market positioning among manufacturers, with smaller, non-integrated players facing greater pressure while larger, vertically integrated companies are better positioned to navigate the current challenges. According to JMK Research, standalone module manufacturers face a real risk of stranded assets due to the current utilisation crisis. The study emphasizes that market access alone will not be sufficient for sustained export growth, requiring manufacturers to close the cost and technology gap with China through scale, integration, and operational efficiency.
The research firms emphasize that the challenge extends beyond capacity building to effective utilisation and value chain development. As noted by JMK Research, the key focus should be on spreading incentives across cells, wafers, and polysilicon rather than rewarding modules alone, strengthening industry-research collaboration, and providing targeted support to exporters. The report also calls for faster power transmission and right-of-way clearances to sustain domestic deployment, along with a framework to repower ageing solar assets, while highlighting India's entry into the Pax Silica coalition as an opportunity to diversify silicon inputs and reduce China dependence.
