India‘s solar module manufacturing capacity is on course to surpass 125 GW in 2025, more than triple its current domestic market demand of around 40 GW, according to analysis by Wood Mackenzie.
The consultancy said in its latest report that this growth will lead to an inventory buildup of 29 GW by the third quarter of 2025. This figure compares to an inventory buildup of 13 GW as of the final quarter of 2023, and of 22 GW as of the final quarter of 2024.
Wood Mackenzie said the capacity surge highlights the success of the country’s production-linked incentive (PLI) scheme, but comes at a time when India is seeing a sharp downturn in its primary export market.
As a result of the 50% reciprocal tariffs imposed by the United States, solar module exports from India to the US fell by 52% across the first half of 2025 when compared to the first half of 2024.
“India’s 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.
Cost differentials now stand out as a key challenge to India’s solar manufacturing market. An Indian-assembled module using imported solar cells costs at least $0.03/W more than a fully imported Chinese module, while a module made entirely in India under new domestic content requirements would cost more than double Chinese-manufactured modules, said Wood Mackenzie.
Hryshko added that despite such near-term challenges, India still holds the clearest potential to become the “only credible, large-scale alternative to the Chinese solar supply chain”. She suggested that India’s success now depends on shifting from just building capacity to achieving cost-competitiveness.
“This will require a pivot to aggressive research and development, investment in next-generation technology, and a strategic push to open new export markets in Africa, Latin America, and Europe,” Hryshko said. “The foundation is built; this is the next step to securing long-term success.”
Wood Mackenzie’s analysis also points out that India is deploying robust protective measures to support domestic manufacturers, including an Approved List of Models and Manufacturers (ALMM) and a recommended 30% anti-dumping duty on Chinese cells and modules.
By the end of the first half of the year, India’s PLI scheme had established 18.5 GW of module capacity, 9.7 GW of solar cell capacity and 2.2 GW of ingot-wafer capacity. Government figures also indicate that the scheme awarded a total 48 GW of module manufacturer capacity by the same date.
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