India’s solar module and cell capacity are projected to touch 200 gigawatt-peak (GWp) and 100 GWp respectively by the end of FY28, outstripping the annual domestic module demand of 50 GWp over the next three years, according to a CareEdge Ratings report released on Wednesday. The trend is expected to benefit integrated players while smaller standalone module units may face consolidation due to margin pressures.

As of July 2025, India’s module manufacturing capacity stood at 118 GWp, while cell capacity was 27 GWp. However, effective operational capacity is estimated at 80–85 GWp for modules and 11–13 GWp for cells, with the rest still stabilising. This translates into annual production of 50–60 GWp for modules and 8–10 GWp for cells, leaving an import dependency of 40–45 GWp for cells.

The accelerated expansion has been supported by rising solar installations, strong policy push, and greater financing access. Domestic cell capacity is projected to reach 100 GWp by FY28, backed by over Rs 550 billion in capital expenditure and increased backward integration efforts. As a result, module production is likely to depend more on exports, while cell output may surpass local demand in the medium term.

CareEdge said integrated players will remain more resilient due to cost efficiencies, whereas pure-play module manufacturers could be vulnerable.

The sector enjoys several tailwinds, including strong demand prospects, favourable policies, and better financing avenues, CareEdge Director Jatin Arya noted. However, challenges such as dependence on Chinese supply chains, uncertain export prospects, and slower renewable energy capacity additions remain concerns.

The report also highlighted that a reduction in GST could cut project costs by 4–5 per cent. Meanwhile, tightening US trade rules may impact Indian module exports, though the medium-term outlook stays positive if domestic manufacturers remain compliant and cost competitive.