Indian solar sector may face oversupply by 2027: SBI Capital

New Delhi [India], August 23 (ANI): India's solar industry could face a potential oversupply as cumulative installations are expected to reach 190 gigawatts by 2027, according to a recent report by SBI Capital.
This concern arises due to a declining scope for exports following recent actions by the United States to roll back incentives for solar projects, the report noted.
According to the report, capacity additions are set to hover around 40-50 GW annually in the coming years to meet India's renewable energy targets, requiring a steady-state module manufacturing capacity of 100 GW.
Over the past two years, India's solar module manufacturing ecosystem has expanded significantly, reaching a capacity of nearly 100 GW.
This growth was driven by supportive government schemes such as the Production Linked Incentive (PLI) and the Approved List of Models and Manufacturers (ALMM), along with a favourable global policy environment. A 60 per cent year-on-year increase in solar installations in FY25 to 24 GW led to a surge in module demand, estimated at 50 GWdc.
The report further noted that despite this growth, challenges remain in upstream integration. While module manufacturing is mature, India's solar cell manufacturing capacity is still below 30 GW.
The report added that the introduction of ALMM-II is expected to support growth in this segment. Effective 31 August 2025, only projects using cells from approved domestic manufacturers will be eligible for procurement.
This includes projects under net metering and open access rules, which open the commercial and industrial (C&I) market to domestic players.
SBI Capital report highlights that cell capacity is expected to rise significantly, moving towards self-sufficiency in the medium term.
In the interim, the limited availability of domestically manufactured cells could raise project costs, potentially dampening bidding enthusiasm.
However, clarity around timelines and exemptions for 100 GW of projects bid out from December 2024 onwards is likely to ease near-term supply pressures.
The report also notes that India currently has a negligible presence in wafer and polysilicon production. Although there is a target to develop 40 GW of wafer capacity by March 2027, on-ground progress is modest.
Rising global polysilicon prices have squeezed margins for international manufacturers who are not fully integrated across the value chain.
In this regard, India's PLI program is noteworthy since it facilitates complete integration from polysilicon to modules, the report added. (ANI)