TL;DR
India is projected to exceed 60 GW of solar cell capacity by the end of the first quarter of 2027, with domestic production accounting for about half of demand. This growth is driven by government policies and capacity investments, though rapid buildout may impact project economics.
India is expected to exceed 60 gigawatts of solar cell manufacturing capacity by the end of the first quarter of 2027, according to Crisil. This growth is driven by significant capacity expansion and government policies aimed at reducing reliance on imports, making domestic manufacturing a key component of India’s solar ambitions.
India’s domestic solar cell capacity is projected to nearly double to 60 GW by the end of fiscal 2026–27, with local production expected to meet approximately half of the country’s total solar demand of 60–65 GW. This shift is largely attributed to capacity expansion by domestic manufacturers and policy measures such as the Approved List of Models and Manufacturers (ALMM), which was implemented by the Ministry of New and Renewable Energy (MNRE) from April 2024.
According to Crisil, the increase in local manufacturing will be driven by new utility-scale solar projects, net-metering, open-access schemes, and government-backed initiatives like the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM). The remaining demand will be met through imports, primarily for projects bid before August 2025, after which reliance on imported cells is expected to decline significantly.
Manufacturers are investing heavily in new capacity, with Crisil forecasting total solar cell manufacturing capacity to nearly double to 60 GW by the end of FY 2026–27. However, this rapid expansion could pressure project returns, with payback periods potentially extending by 1–2 years compared to early adopters who benefited from higher premiums and utilization rates.
Implications of Rapid Capacity Expansion on India’s Solar Sector
The projected growth in domestic solar cell capacity to over 60 GW by early 2027 signifies a major shift in India’s renewable energy landscape. It reduces dependence on imported cells, enhances local manufacturing, and aligns with government policies aimed at self-reliance. However, the rapid buildout could impact project economics, potentially affecting investor returns and the financial viability of upcoming solar projects.
This development also signals increased competitiveness among Indian manufacturers and could influence global supply chains, especially as capacities expand further into upstream segments like ingots and wafers. The move toward local manufacturing supports India’s broader energy transition goals and could accelerate the country’s renewable capacity additions.
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Background on India’s Solar Manufacturing Policies
India’s push for local solar manufacturing has gained momentum with policies such as the ALMM introduced in April 2024, which mandates the use of domestically manufactured modules and components for certain projects. The government’s efforts aim to cut import dependence, which has historically limited the growth of the sector.
Prior to these policies, India relied heavily on imported solar cells, especially from China. Crisil’s report indicates that domestic capacity was only about a quarter of demand in FY 2024, but policy measures and capacity investments are expected to increase local share significantly in the coming years. The upcoming implementation of the ALMM-III framework for ingots and wafers, expected from June 2028, could further bolster local upstream production.
“The surge in solar cell capacity will redraw project economics, with payback periods potentially stretching by 1–2 years compared to early movers.”
— an anonymous researcher
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Factors That Could Influence Capacity Realization
It remains uncertain whether all announced capacity expansions will be completed on schedule or if policy adjustments, delays in project approvals, or supply chain disruptions might slow growth. Additionally, the impact of potential exemptions under the ALCM framework for existing projects and how they might affect demand for domestically produced cells is still being evaluated.
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Upcoming Policy Milestones and Capacity Rollouts
Manufacturers are expected to continue investing in capacity expansion, with the goal of reaching or exceeding 60 GW by early 2027. The implementation of the ALCM-III framework for ingots and wafers from June 2028 will be a key milestone, potentially enabling further upstream capacity growth. Monitoring project approvals, policy updates, and supply chain developments will be critical to assessing actual capacity realization.
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Key Questions
What factors are driving India’s solar capacity growth?
Government policies such as the ALMM and capacity expansion plans by domestic manufacturers are the primary drivers, supported by initiatives like KUSUM and increased project bidding activity.
Will India completely replace imports with domestic solar cells?
Not immediately. Imports are expected to continue for projects bid before August 2025, but reliance on imported cells is projected to decline significantly afterward as local capacity ramps up.
How might rapid capacity expansion affect solar project economics?
It could extend payback periods by 1–2 years due to increased competition and lower utilization rates, impacting project returns and investor confidence.
When will upstream segments like wafers and ingots see increased local production?
The government’s proposed ALMM-III framework for ingots and wafers is expected to be implemented from June 2028, which could improve upstream capacity and local manufacturing viability.
Source: PV Magazine
