India's Solar Industry Faces Overcapacity Challenges: A Call for Strategic Upstream Investments

The Indian solar module sector is grappling with challenges of oversupply, prompting industry experts to call for a strategic pivot towards bolstering upstream manufacturing capabilities. According to a report by Elara Securities, the focus should now be on enhancing backward integration as upstream segments such as cells, wafers, ingots, and polysilicon remain largely underdeveloped.

Despite a significant upsurge in module manufacturing, structural imbalances persist within the solar ecosystem. The report emphasizes an urgent need to align the rapid capacity addition with sustainable module integration. Currently, India's operational module capacity is around 144GW, expected to reach 180GW by FY30, yet cell capacity trails at approximately 23.4GW, suggesting an overcapacity trajectory.

External factors, including US tariffs restricting exports, exacerbate domestic oversupply issues, pressuring smaller manufacturers and increasing consolidation risks. Policy shifts, such as the ALMM List-II that mandates local cells by 2026, are seen as potential game-changers, driving demand for domestically manufactured components. The sector’s growth opportunities hinge on comprehensive upstream investments tailored for long-term sustainability.