Solar Panel Manufacturing in India: Capacity, Policy and Who Makes Money
SRF Capital Studio Research DeskFunding Intelligence, SRF Capital StudioIndia now has more solar module factories than it can fill. The money and the risk have moved upstream, to cells and wafers, and to whoever can sell outside a closing US market.
Summary
- India's solar module capacity has run far ahead of both domestic demand and its own cell supply: roughly 233 GW of module lines against about 35 GW of cells and around 2 GW of ingots and wafers in mid-2026.
- Policy now decides who gets paid. ALMM List-II forces domestic cells into most projects from June 2026, List-III will do the same for wafers from June 2028, and the US has moved to shut the one export market that mattered.
- Our view: module assembly is becoming a low-margin commodity business in India; the defensible positions are integrated cell capacity, the components and services around the factories, and balance sheets strong enough to survive a shake-out.
What this report covers
This is a report on the manufacturing side of India's solar industry: the factories that turn polysilicon into wafers, wafers into cells and cells into the panels on rooftops and in desert parks. We cover deployment only as the demand those factories depend on.
It is written for two readers. The first is an investor deciding whether listed manufacturers, unlisted capacity builders or the suppliers around them deserve capital at 2026 prices. The second is an MSME owner asking where a smaller business can earn a living in a sector dominated by gigawatt-scale groups.
All figures are as of September 2026 and every one is attributed. Where sources disagree, which happens often in this sector because they count capacity differently, we say so rather than pick the flattering number.
The size of the industry, and the gap in it
Start with demand. India had 164.59 GW of installed solar capacity on 31 July 2026, according to MNRE data, of which about 122.6 GW was ground-mounted and 30.7 GW was grid-connected rooftop. The country added about 44 GW in FY2025-26, a record (JMK Research), and ICRA expects annual installations of 55 to 60 GWdc from here.
Now supply. Module capacity is where the story gets uncomfortable. The ALMM List-I, the government register of approved module makers, reached 193 GW in May 2026 (MNRE). Total nameplate module capacity was about 233 GW in June 2026 by the count of IEEFA and JMK Research, while ICRA puts it at 217 GW in August 2026. In 2022 it was under 20 GW.
Those numbers describe an industry that has built roughly four years of domestic demand into one year of factory capacity. IEEFA and JMK Research estimate module factories were running at 35 to 40 percent , against the 50 to 65 percent they consider sustainable.
India has built roughly four years of domestic solar demand into one year of module factory capacity.
India's solar manufacturing capacity by stage against annual installations
| Stage | Capacity in India, mid-2026 | What it means |
|---|---|---|
| Modules (nameplate) | About 233 GW (June 2026); 217 GW by ICRA's count (Aug 2026) | Several times annual domestic demand |
| Modules on ALMM List-I | 193 GW (May 2026) | What government-linked projects can buy |
| Cells | About 35 GW (Aug 2026), up from 13 GW in July 2025 | The binding constraint on compliant modules |
| Ingots and wafers | About 2 GW | Almost entirely imported, mostly from China |
| Annual installations | About 44 GW in FY26; 55 to 60 GWdc expected per year | The demand every stage is sized against |
The shape of the table is the whole argument. Module capacity is nearly seven times cell capacity and more than a hundred times ingot and wafer capacity, as IEEFA and JMK Research put it. An Indian module is, for now, mostly an assembly of imported upstream material.
How the value chain works
A crystalline silicon panel passes through five manufacturing stages, and each has different economics. Knowing which stage a company sits in tells you most of what you need about its margins and risks.
- Polysilicon. Purified silicon, made in large chemical plants. Highly capital-intensive and power-hungry. India has no meaningful commercial production today.
- Ingots and wafers. Polysilicon is grown into crystal ingots and sliced into thin wafers. Technically demanding, with tight process control. India has about 2 GW.
- Cells. Wafers are doped, coated and printed with contacts to become cells. This is where efficiency technology (PERC, TOPCon, heterojunction) is decided. India has about 35 GW.
- Modules. Cells are strung, laminated with glass, encapsulant and backsheet, and framed. The least capital-intensive stage and the easiest to enter, which is why India has so much of it.
- Balance of system components. Glass, aluminium frames, junction boxes, encapsulant film, mounting structures, cables and inverters. Many are within reach of mid-sized manufacturers.
The IEA estimates China holds more than 80 percent of global capacity across the main manufacturing stages. Every Indian module maker that buys imported cells or wafers is therefore exposed to Chinese pricing decisions it cannot influence, which is exactly the exposure Indian policy is now trying to remove.
Where the margin sits
Published margins for Indian solar manufacturers vary widely by year, product mix and whether export orders were in the book. As a rough industry range, standalone module assembly earns single-digit to low-teens operating margins in a normal year, and less when prices fall. Integrated cell-and-module makers earn more, because the cell is where the technology and the domestic-content premium now sit.
The reason is scarcity. A buyer who must use domestic cells, for a subsidised rooftop or a government project, can only buy from the roughly 35 GW of cell lines that exist. The same buyer can choose among more than 190 GW of approved module capacity. Pricing power follows the scarce input.
The policy stack: four levers that decide who sells
Indian solar manufacturing is a policy-made market. Four instruments, layered over each other, decide which products a buyer may purchase and what an import costs.
ALMM: the approved list
The Approved List of Models and Manufacturers is MNRE's register of solar products that may be used in government, government-assisted and many regulated projects. A factory gets onto it after inspection. It is a gate, not a subsidy.
It now has three parts. List-I covers modules and reached 193 GW in May 2026. List-II covers cells: its first edition on 31 July 2025 enlisted just over 13 GW, and by its April 2026 revision it passed 30 GW, with Waaree and Reliance among the entrants. List-II took effect on 1 June 2026, so projects in its scope must now use modules made with listed cells.
There is relief at the edges. Trade reports of a July 2026 MNRE order say net-metering installations and open-access or group-captive projects have until 31 December 2026 to comply with List-II. Utility-scale tenders and subsidised rooftop schemes got no extension.
List-III is next. MNRE has extended ALMM to ingots and wafers from 1 June 2028. The first List-III can only be issued once at least three independent wafer makers, not under common ownership, have a combined 15 GW, and an enlisted wafer maker must also have matching ingot capacity. From that date, List-I will only include modules made with listed cells and listed wafers.
Each new ALMM list moves the scarcity, and the margin, one step further up the chain.
DCR: domestic content where the state pays
The domestic content requirement is narrower and stricter than ALMM. A DCR module must use cells and modules both made in India. It applies to schemes where public money is involved: PM Surya Ghar Muft Bijli Yojana for home rooftops, PM-KUSUM components B and C for farm pumps and small distributed plants, and the CPSU scheme Phase II for government-owned captive solar.
MNRE has tightened enforcement. The National Institute of Solar Energy runs a DCR verification portal, now linked to the PM Surya Ghar national portal, so a subsidy claim can be traced to the cell. For manufacturers this makes the DCR segment a protected, premium-priced market that only integrated cell makers can fully serve.
Import duties
From 2 February 2025, the Union Budget changed the duty on imported solar products. Modules now carry a 20 percent basic customs duty plus a 20 percent agriculture infrastructure and development cess, broadly keeping the combined protection near where it was. Cells carry a 20 percent basic duty plus 7.5 percent cess.
The design is deliberate. Duties protect domestic module makers from finished Chinese panels while keeping imported cells affordable enough for those same makers to assemble. The trouble is that it also removed some of the pressure to build cells, which ALMM List-II is now supplying by rule instead.
PLI: the incentive that has not yet paid
The production-linked incentive for high-efficiency solar modules has a total outlay of ₹24,000 crore in two tranches. Tranche I, worth ₹4,500 crore, went to three bidders (Reliance New Energy Solar, Adani and Shirdi Sai) for 8,737 MW of fully integrated capacity. Tranche II, worth ₹19,500 crore, went to 11 bidders in April 2023 for 39,600 MW of fully or partially integrated capacity (PIB, SECI).
Execution has lagged the plan. Trade reports put integrated cell-and-module capacity declared commissioned under Tranche II at around 4 GW by October 2025, against a schedule that expected 7.4 GW by October 2024. The ministry said in February 2026 that no PLI money had yet been disbursed, because incentives start only after a full year of commissioned operation.
Investors should read that plainly. The PLI has shaped who built integrated capacity and how, but it has not yet been cash in any manufacturer's account. A business plan that depends on PLI receipts in the next few quarters is betting on a disbursement process that has not run once.
The policy instruments that shape India's solar manufacturing market
| Instrument | What it does | Status, September 2026 |
|---|---|---|
| ALMM List-I | Approved modules for government-linked and regulated projects | 193 GW enlisted (May 2026) |
| ALMM List-II | Approved cells; modules in scope must use them | In force from 1 June 2026; over 30 GW enlisted |
| ALMM List-III | Approved ingots and wafers | Takes effect 1 June 2028; needs 15 GW from three independent makers first |
| DCR | Cells and modules both made in India | Mandatory for PM Surya Ghar, PM-KUSUM B and C, CPSU Phase II |
| Customs duty | Raises the cost of imported modules and cells | Modules 20% BCD plus 20% AIDC; cells 20% BCD plus 7.5% AIDC |
| PLI | ₹24,000 crore for integrated capacity | 48.3 GW awarded across two tranches; no disbursement as of Feb 2026 |
The export question, and the US door closing
For two years, the United States looked like the answer to Indian overcapacity. It was not a diversified answer. IEEFA and JMK Research count 4.5 GW of Indian module exports in FY2025-26, and 97 percent of that volume went to the US. Exports to every other market combined came to about 128 MW.
That market is now closing. In September 2026 the US Department of Commerce issued final affirmative determinations in its anti-dumping and countervailing duty investigations of crystalline silicon cells and modules from India, Indonesia and Laos. The rates set for Indian exporters were 123.04 percent anti-dumping and 126.09 percent countervailing duty.
The duties are not yet final orders. The US International Trade Commission is scheduled to vote on injury on 14 October 2026; an affirmative vote would let Commerce issue orders, expected in November. Trade press lists Adani's Mundra units and Premier Energies among the companies examined, with Waaree and Vikram Solar in the all-others group.
ICRA already reports that tariff uncertainty has pushed modules meant for export back into the domestic market. That adds supply to a market that was already oversupplied, and it lands just as module factories are fighting for orders.
India's solar export market was one country deep, and that country has now priced Indian panels out.
Our view: companies that built US-facing capacity will not replace that volume elsewhere in 2027. Europe buys on price against Chinese supply, and other markets are small. The realistic plan is to redirect that capacity to domestic DCR and List-II demand, where Indian cells command a premium, or to serve the US from assembly capacity located there.
Who is winning
The field splits into three kinds of company, and they face different futures.
Integrated groups with cells
Waaree Energies is the largest by module capacity, at about 26 GW, which it describes as the largest outside China. It has commissioned 5.4 GW of cell capacity, and cell output rose from 0.1 GW in FY25 to 2.3 GW in FY26 against 12.6 GW of module output (company FY26 results). Premier Energies has expanded modules to 11.1 GW and planned to grow cell capacity from 3.6 GW to 10.6 GW by September 2026.
Adani's Mundra complex and Reliance's new energy business were both Tranche I PLI winners for fully integrated capacity, and Reliance entered ALMM List-II in 2026. Tata Power's solar manufacturing arm is the other long-standing integrated name. ReNew, better known as a developer, has broken ground on a 6.5 GW ingot-wafer plant in Andhra Pradesh, one of the few upstream bets beyond cells.
These groups own the scarce input. They can serve DCR demand, sell cells to module-only makers, and carry the cost of moving to newer cell technologies.
Module-only assemblers
This is the crowded middle: dozens of companies with module lines and no cells, many built between 2023 and 2025 to catch the export wave and the pre-List-II rush. They buy cells from importers or from integrated rivals who also compete with them for module orders.
Their position is weak. They cannot serve DCR demand without buying domestic cells at a premium, their export outlet is closing, and older lines built for PERC-era formats may not make the modules developers now specify. ICRA notes that operational module capacity is lower than nameplate for exactly this reason. We expect consolidation here, through acquisitions by integrated groups or through quiet closures.
Component and service suppliers
Around every factory sits a ring of suppliers: solar glass, aluminium frames, encapsulant and backsheet film, junction boxes, ribbon, mounting structures, and the testing, maintenance and automation work that keeps lines running. Demand for many of these follows installed factory capacity, not module prices, and several are protected by the same localisation push.
This is where most MSMEs should look. It needs a fraction of the capital of a cell line, and a supplier can serve several manufacturers at once, which spreads the consolidation risk the assemblers carry.
The economics of building a factory
Rough industry estimates put the cost of an integrated cell-and-module plant in the range of several hundred crore rupees per gigawatt, with cells taking most of it; module-only lines cost a fraction of that. Ingot and wafer capacity costs more again, and polysilicon more still. The exact figure depends on technology, land, and whether the buildings and utilities already exist.
Three things decide whether that capital earns a return.
- Utilisation. Fixed costs are high, so a line running at 35 percent loses money that one at 70 percent makes. Most of India's module base is at the wrong end of that range today.
- Technology timing. Cell technology moves fast. Lines built for older PERC cells are being overtaken by TOPCon and heterojunction, and a plant that commissions late into a technology cycle has a short useful life before it needs reinvestment.
- Access to protected demand. A factory whose output qualifies for DCR and List-II projects sells at a premium; one that does not competes with the whole oversupplied market.
For an investor, the implication is that nameplate capacity is a poor measure of value. Ask what share of a company's capacity is cells, what technology the lines run, how much of the order book is DCR or List-II demand, and what utilisation the last four quarters actually delivered.
The risks
The main risks to Indian solar manufacturers in 2026 and 2027
| Risk | What could happen | Who it hurts most |
|---|---|---|
| Module overcapacity | Utilisation stays at 35 to 40 percent and module prices fall below cost | Module-only assemblers without cells |
| US AD and CVD orders | Exports to the one large export market stop if the ITC votes yes on 14 Oct 2026 | Manufacturers with US-facing capacity and order books |
| Upstream dependence | Wafer imports stay above 90 percent until List-III, leaving cost exposed to China | Cell makers without wafer supply contracts |
| Policy timing | ALMM deadlines are extended or tightened at short notice | Developers with bids priced on one assumption |
| PLI disbursement delay | Incentive cash arrives later than business plans assumed | PLI beneficiaries with debt sized to incentive receipts |
| Technology obsolescence | PERC-era lines lose orders to TOPCon and heterojunction | Plants commissioned before 2024 without upgrades |
Two of these risks deserve a closer look because they are the most often understated.
The first is overcapacity. Capacity announcements are still coming: IEEFA and JMK Research count about 135 GW more planned or under construction. A market already running at 35 to 40 percent utilisation will not absorb that without price pressure, and the companies that financed capacity with debt will feel it first.
The second is the wafer gap. Until List-III takes effect in 2028, and probably for some time after, Indian cells will be made on imported wafers. That makes the cell premium partly a policy rent rather than a cost advantage. If wafer prices move, or trade relations shift, the premium can narrow quickly.
What to do
For investors
- Value capacity by stage, not by headline gigawatts. A gigawatt of cells in 2026 is worth far more than a gigawatt of modules. Ask for the split, and for audited utilisation.
- Stress-test for a US shutdown. Assume US exports go to zero from November 2026 and see what is left of the earnings. Do not accept a plan to replace the volume in Europe without named buyers.
- Treat PLI as upside, not base case. Until the first disbursement cycle completes, model it as a probability, not a receivable.
- Look at the ring around the factories. Glass, film, frames and specialised equipment suppliers can grow with factory capacity without carrying module price risk. They often trade on less crowded valuations.
- Check wafer strategy. Any cell maker valued as a long-term winner should have a credible answer for List-III, whether its own ingot-wafer plant or long-term supply.
Our market intelligence and due diligence work in this sector starts with those five questions.
For MSMEs
- Do not build module lines. The market has more than enough. Entering now means competing on price with better-capitalised groups in a falling market.
- Supply the factories. Components that must now be local for DCR and ALMM compliance, and services such as line maintenance, automation, testing and quality inspection, need less capital and have more customers.
- Sell into the protected segments. Rooftop and farm-solar installers under PM Surya Ghar and PM-KUSUM buy DCR modules by rule. An installer or distributor with good terms from an integrated maker has a steadier business than an assembler.
- Watch working capital. Manufacturers under price pressure lengthen payment terms to suppliers. Price your contracts for that, as we argue in payment terms are price.
- Plan for scheme lag. Government schemes take time to move from announcement to paying customers. Build a plan that survives a year of slower demand than the scheme's headline suggests.
MSMEs in renewable energy components face the same question manufacturers in every protected sector face: whether the protection is a to build a real cost position, or a rent that disappears when the rules change. Our work with manufacturers starts by separating the two.
Our view
India's solar manufacturing push has worked on the measure the government set first: domestic module capacity now exceeds what the country can install. It has not yet worked upstream, and the upstream is where the value and the strategic risk sit.
Over the next two years we expect three things. Module-only capacity consolidates, with some lines closing. Cell capacity keeps growing toward the ICRA projection of about 100 GW by December 2027, which will erode today's cell premium as it arrives. And wafer capacity becomes the new bottleneck ahead of the 2028 List-III deadline, with the same scramble cells saw in 2025 and 2026.
The companies that do well will be the ones that invested one stage ahead of the rule rather than one stage behind it. For everyone else, the better business is usually beside the factory, not inside it.
Method and sources
This report was prepared by SRF Capital Studio's research desk, focused on manufacturing, and checked against public sources on 18 September 2026. Capacity figures are counted differently by different sources (nameplate, enlisted under ALMM, or operational), and we name the basis each time. Figures we could not confirm were removed.
- Ministry of New and Renewable Energy (mnre): almm List-I, List-II and List-III orders and updates; physical progress data to 31 July 2026
- Press Information Bureau (PIB): PLI Tranche II allocation release; ALMM extension to ingots and wafers
- Solar Energy Corporation of India (SECI): awards
- Union Budget 2025-26: customs duty changes on solar cells and modules
- IEEFA and JMK Research: India's solar PV manufacturing capacity and overcapacity risk (June 2026)
- ICRA: overcapacity in modules and upstream gaps, as published by pv magazine India (16 September 2026)
- JMK Research: India's FY2026 solar and wind installations
- US Department of Commerce, International Trade Administration: final AD and CVD determinations on crystalline silicon PV cells from India, Indonesia and Laos (September 2026)
- Waaree Energies and Premier Energies: FY2026 results and company disclosures
- IEA: global solar PV supply chain concentration
- Trade press: pv magazine India, Mercom India, Energetica India, Saurenergy, TaiyangNews, SolarQuarter
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