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Agencies29 GW inventory surplus likely; India may become only alternative to the Chinese solar supply chain, says report New Delhi: India's solar module manufacturing capacity is set to surpass 125 GW by 2025, more than triple the domestic demand of around 40 GW, creating an inventory surplus of 29 GW, according to Wood Mackenzie.The surge has been fueled by the government's Production Linked Incentive (PLI) scheme, which has spurred rapid factory expansion.However, the industry now faces overcapacity risks, compounded by a sharp decline in exports to the United States, where new 50% reciprocal tariffs caused module shipments to fall 52% in the first half of 2025.Several manufacturers have paused their US expansion plans and refocused on the domestic market.Wood Mackenzie warned that cost competitiveness remains a challenge.Live EventsIndian-assembled modules using imported cells are at least $0.03 per watt more expensive than fully imported Chinese modules, while fully 'Made in India' modules could cost more than double their Chinese counterparts without government support.Protective measures, including the Approved List of Models and Manufacturers (ALMM) and a proposed 30% anti-dumping duty on Chinese modules, are being deployed to support domestic producers.Experts say India has the potential to become a large-scale alternative to China's solar supply chain, but long-term success will depend on R&D, technology investment, and diversification into export markets such as Africa, Latin America, and Europe.Separately, CareEdge Advisory, a subsidiary of CareEdge Ratings, said India is likely to reach 216 GW of solar capacity by FY28, supported by PLI schemes that have already approved multiple tranches for integrated manufacturing across polysilicon, ingot, wafer, cell, and module stages.It said the strong response to applications under these schemes is enabling rapid capacity expansion, while efficiency gains - where 1,700-2,200 panels (at 500Wp) are typically deployed for every 1 MW of solar power - are reinforcing scale advantages in project execution. It expects India's solar capacity and generation to reach 215.8 GW and 305.0 BU, respectively, over the coming years."The Indian government's PLI scheme has been highly effective in spurring factory announcements, but the industry is now seeing warning signs of rapid overcapacity similar to those that preceded China's recent price collapse," said Yana Hryshko, Head of Solar Supply Chain Research at Wood Mackenzie."The challenge has shifted from building capacity to achieving cost-competitiveness and diversifying export markets."Despite near-term challenges, Wood Mackenzie identifies India as having the clearest potential to become a large-scale alternative to China's solar supply chain dominance. With domestic capacity significantly exceeding the protected market of approximately 40 GW, Indian manufacturers must look beyond current protective policies to achieve sustainable growth."India is at a crossroads, but it holds the clearest potential to become the only credible, large-scale alternative to the Chinese solar supply chain," Hryshko concluded.The current challenges are not roadblocks, but rather a clear roadmap for the future. Success now depends on shifting focus from just building capacity to achieving cost-competitiveness.This will require a pivot to aggressive R&D, investment in next-generation technology, and a strategic push to open new export markets in Africa, Latin America, and Europe. The foundation is built; this is the next step to securing long-term success.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onIndia solar manufacturing capacityovercapacity concernsProduction Linked Incentive schemesolar supply chainsolar module exportsdomestic solar demand (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onIndia solar manufacturing capacityovercapacity concernsProduction Linked Incentive schemesolar supply chainsolar module exportsdomestic solar demand(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless
