India Built the Capacity. Now it Must Make it Competitive

October 27, 2026. By News Bureau

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Bernhard Rack

India's solar manufacturing sector has grown at remarkable speed, powered by strong policy support, ambitious targets and private investment. That phase has delivered. The question before us now is different: not how much capacity we can build, but whether that capacity is backed by cell supply, competitive technology, reliable demand and diversified markets.

Capacity has Outrun Demand and Cell Supply

By most industry estimates, India's module factories are running at just 35-40 percent utilisation against well over 230 GW of nameplate capacity. That average conceals a widespread: leading Tier 1 manufacturers ran at 50–80 percent in FY2026, while many standalone assemblers sit far below. Demand has not collapsed. India added a record 44.6 GW of solar in FY2026 and another 20.8 GW in the first half of this financial year. The gap lies between nameplate capacity, and everything needed to run it: cells, offtake and export visibility.

If I had to name the drivers, several are converging. Domestic cells are scarce for manufacturers without captive lines, and module capacity was commissioned well ahead of the cells needed to feed it. No one factor explains the number. Together, they do.

The Cell Bottleneck

India has only about 35–37 GW of cell capacity. What matters most is merchant availability. Most of it is tied to integrated manufacturers for their own use; by some estimates, only around 2 GW reaches the open market. For a standalone module maker, that is the real constraint.

Cells must also match on technology, format and ALMM eligibility, so procurement becomes unpredictable. Buyers book months ahead or pay upfront for priority, and ready lines can sit idle waiting for the right cells. A standalone manufacturer typically pays more for its cells, with less certainty of getting them, than a competitor with captive supply.

ALMM List II: The Right Signal, a Tight Transition

List II is doing what it was designed to do: creating a firm demand signal for domestic cells and accelerating backward integration. Since the mandate took effect on 1 June 2026, many manufacturers without a cell strategy are now building one.

In the short term, though, List II has intensified competition for a limited pool of eligible cells. The first List II release covered around 13 GW. It has since grown past 37 GW, but much of that is captive, contracted or still ramping up. Integrated players can allocate internally and absorb shortages. Standalone manufacturers face longer lead times, higher prices and reprioritisation.

Capacity Ran Ahead of Execution

India had roughly 2.3 GW of module manufacturing capacity in 2014. By August 2025, capacity enlisted under ALMM had crossed 100 GW, and it has more than doubled since. But this is not simply an oversupply story. Module assembly is faster and less capital-intensive than cells or wafers, so many companies went downstream first.

Installed solar capacity crossed 171 GW at the end of September, and official planning projections point to about 293 GW by 2029–30. The challenge is conversion. Renewable energy tendering fell by nearly half in FY2026, and a deployment projection is not an order book.My honest assessment is that India's market is not too small. Capacity simply came online faster than execution, cell supply and bankable offtake could follow.

The Export Lesson

India shipped roughly 4.5 GW of modules in FY2026, with the United States taking about 97% of the volume. Exports to the US are now down by nearly half from their FY2024 peak, and that dependence has become a vulnerability. In September, the US Commerce Department issued final anti-dumping and countervailing duty determinations that together exceed 200% for Indian cells and modules.

Even setting tariffs aside, we are competing against Chinese and Southeast Asian supply chains with far greater scale and deeper upstream integration. Traceability and policy advantages help at the margin, but they do not close a structural price gap. Exports can support utilisation; they cannot replace a broad, diversified demand base.

The Next 24 Months: Selective and Integrated

Industry estimates put another 135 GW of module capacity in the pipeline, while 45–50 GW of existing capacity looks vulnerable to consolidation. Well-capitalised manufacturers will move deeper into cells and, eventually, wafers. I expect some smaller players to be acquired, merged or turned into contract manufacturers, and older PERC lines to be idled. Lenders and developers will also look for secured cell supply, competitive technology and firm offtake before financing new capacity.

I don't think this sector is uniformly distressed. Integrated manufacturers with competitive technology and diversified offtake can grow through this. The pressure falls hardest on undifferentiated assemblers.

The Real Test is Technology

Equipment can be purchased. Manufacturing capability must be developed. Five years out, the question will not be how many gigawatts India has installed, but whether our manufacturers can keep pace as PV technology moves beyond TOPCon towards back-contact and tandem architectures.

The industry will divide into two camps: companies that treat the factory as a technology platform, investing continuously in process engineering, automation, yield and R&D, and those that remain dependent on imported equipment and know-how. A single point of efficiency or a few paise per watt will matter more than another gigawatt of nameplate capacity. The strongest Indian manufacturers will be technology companies that happen to manufacture at scale.

Get this right, and India becomes more than a production base for Western markets: a genuine centre for next-generation photovoltaics and a real challenger to China, not merely an alternative supplier.

The shift from how much we manufacture to how competitively we manufacture will decide how much of today's 200-plus GW remains economically relevant by 2030.

It is why, at Kurnool, we chose to build ingot and wafer capacity rather than stop at module assembly. We would rather be on the right side of that divide than be caught by it.

- Bernhard Rack, CEO, Agastya Energy