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India’s 233 GW Solar Module Capacity Runs at 35–40 Percent Utilisation: IEEFA

India’s solar PV module manufacturing capacity has reached about 233 GW as of June 2026, but factories are operating at only 35–40 percent utilisation, raising concerns over overcapacity, margins and stranded assets, according to an IEEFA-JMK Research report.

September 02, 2026. By Mrinmoy Dey

India has become the world’s second-largest solar photovoltaic (PV) module manufacturer with a capacity of about 233 GW as of June 2026. However, its module factories are running at just 35–40 percent utilisation, well short of the 50–65 percent needed to operate sustainably, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research.

The report titled ‘Assessing overcapacity risk in India’s solar PV manufacturing market ’ finds that this expansion has been overwhelmingly concentrated at the module stage. Module capacity now stands at nearly 7x cell capacity and 116x ingot-wafer capacity, leaving upstream segments such as cells, wafers, and polysilicon underdeveloped and the supply chain dependent on imported inputs, predominantly from China.

Prabhakar Sharma, Senior Consultant at JMK Research and lead author of the report, said, “India has added module capacity faster than the market can absorb it. With around 135 GW more already planned or under construction and factories running at 35–40 percent, the pressure on utilisation, margins, and returns will only intensify. Standalone module manufacturers face a real risk of stranded assets.”

The report finds this imbalance is unlikely to ease by 2030. India’s solar deployment is expected to grow strongly, but not fast enough to absorb the capacity already committed. New demand from data centres, green hydrogen and ammonia, and exports offers the most credible upside, an incremental 17–22 GW by 2030, with green hydrogen the single largest avenue given the dedicated renewable capacity it requires. Even so, this is unlikely to fully offset the planned scale of expansion, stated the report.

Exports will therefore be pivotal, and here the picture is shifting fast. India’s export base is heavily exposed to a single market: the US absorbed around 97 percent of module export volume in FY 2026. That channel has since been disrupted by combined US duties exceeding 200 percent on most Indian manufacturers, which have cut exports to the US by 44–47 percent from their FY2024 peak. The European Union, whose recent supply-chain and sourcing rules increasingly reward diversification, now offers the most structured medium-term alternative.

Charith Konda, Lead Energy Specialist at IEEFA, and contributing author of the report along with Vibhuti Garg, Director, South Asia, IEEFA, said, “India may have the opportunity to unlock new export markets, provided Indian solar PV manufacturers can effectively compete with Chinese manufacturers by investing in R&D and the manufacturing of polysilicon, ingots, wafers, and cells. But market access alone will not be enough. Sustained export growth depends on closing the cost and technology gap with China through scale, integration, and operational efficiency.”

On the supply side, the report expects the gap between capacity and demand to reshape the industry. Smaller, non-integrated manufacturers will come under greater pressure, while larger, vertically integrated players are positioned to gain. Domestic manufacturing is also likely to move upstream, from modules into cells, wafers, and eventually polysilicon, reducing reliance on imported inputs.

“The challenge is no longer building capacity; it is using it well and deepening the value chain. That means spreading incentives evenly across cells, wafers, and polysilicon rather than rewarding modules alone, strengthening industry-research collaboration, and giving exporters targeted, time-bound support,” remarked Chirag H. Tewani, Senior Research Associate, JMK Research, and report co-author.

“India’s entry into the Pax Silica coalition is a real opportunity to diversify silicon inputs and cut its reliance on China,” added Pulkit Moudgil, Senior Research Associate, JMK Research, and co-author of the report.

Alongside these measures, the report calls for faster power transmission and right-of-way (RoW) clearances to sustain domestic deployment, and a framework to repower ageing solar assets. It concludes that today’s module overcapacity is best viewed as a transitional feature of a fast-expanding industry, one that can be resolved through demand absorption, consolidation, and disciplined upstream investment over the coming decade.

Tags:

Solar PV

India module manufacturing capacity

Solar module demand in India

Solar module exports

Factory utlisation for solar modules

Solar module overcapacity