Solar Module Overcapacity to Squeeze OEM Margins, Drive Industry Consolidation: ICRA
ICRA projects India’s solar module manufacturing capacity to surge to over 165 GW by March 2027, warning that the resulting overcapacity could squeeze OEM profitability and trigger consolidation among smaller players, stated credit rating agency ICRA.
November 07, 2025. By Mrinmoy Dey
The industry is poised to face a potential overcapacity scenario as the annual solar capacity installation is expected at 45-50 GWdc against an annual solar module production of 60-65 GW, said ICRA in a statement.
Further, the recent imposition of US tariffs has adversely impacted the export volumes, posing new challenges for the industry as the modules have been redirected from the export market to the domestic market. Hence, the overcapacity in module production is likely to result in a consolidation of the smaller/pureplay module players.
However, ICRA anticipates the vertically integrated manufacturers to benefit over the long term due to greater control over the supply chain.
Commenting on the solar OEMs, Ankit Jain, Vice President and Co-Group Head - Corporate Ratings, ICRA, said, “The operating profitability for ICRA's sample set of domestic solar OEMs, which remained elevated at about 25 percent in FY2025, is likely to moderate due to competitive pressures and overcapacity build-up. The recent imposition of tariffs by USA and the growing regulatory uncertainty in the USA are likely to dampen export volumes, potentially exerting pricing pressures on domestic OEMs.”
He further added, “Given that the ALMM requirement for solar cells is effective from June 2026, a significant scale-up in the cell manufacturing capacity along with its stabilisation in a timely manner remains critical in the near term. Further, the cost of modules using domestic cells is expected to be higher by 3-4 cents/watt compared to the cost of the domestic modules using imported cells.”
ICRA also noted that all projects wherein the last date of bid submission is prior to September 1, 2025, translating into a solar project pipeline of 45-50 GW, will be exempted from the requirement of using solar PV cells under ALMM List-II even if their date of commissioning is after June 1, 2026. This will support the order book of OEMs without cell manufacturing capacity in the near term.
The solar PV manufacturing supply chain is dominated by China, with over 90 percent share in the global manufacturing capacity across polysilicon and wafer, over 85 percent share in cells and around 80 percent share in modules.
“Given the dependence on China for the sourcing of wafers and ingots, any potential geopolitical restrictions on the supply of technology/machinery in setting up backward integration facilities for domestic OEMs over the medium term remains a key monitorable,” ICRA noted.
Moreover, each successive stage in the value chain demands higher technological complexity, which not only requires substantial capital investment but also heightens the risks associated with project stabilisation and implementation, stated ICRA.
please contact: contact@energetica-india.net.
Vinay Thadani
Executive Director and CEO
GREW Solar Eyes 11 GW Module Capacity by Year-End, 8 GW Cell Plant by 2026: Vinay Thadani
Gautam Mohanka
Managing Director
Gautam Mohanka Highlights AI-Driven Defect Detection as Gautam Solar’s Key Differentiator
Praveen Krishna
ESG Lead and Head of Investor Relations
Sify’s First ESG Rating: Setting a Benchmark for Responsible Growth
Vikas Bansal
President & CEO - International
By Mid-2026, GameChange Solar India Intends to Achieve 100 Percent Localisation: Vikas Bansal
Neha Jain
Head – EV & Innovation Ecosystem
Neha Jain Highlights JSW MG Motor’s Push for Localised, Future-Ready EVs in India