Rapid Expansion Puts India's Solar Industry At Risk Of Oversupply: Report

(MENAFN- KNN India) New Delhi, Sep 18 (KNN) Yes Securities has stated in a recent report that India's solar industry is at an inflection point, showing rapid growth but also facing several looming risks.

Supported by favourable government policies, rising investments, and expanding production capacity, the sector has scaled up significantly over the past few years.

India's solar module manufacturing capacity has now reached nearly 100 gigawatts (GW), while solar cell capacity has crossed 25 GW. With multiple expansion plans underway, the country's total module capacity could touch 160–170 GW by 2028.

Policies such as the Production Linked Incentive (PLI), Basic Customs Duty (BCD), and the Approved List of Models and Manufacturers (ALMM) have played a key role in driving this growth momentum.

However, the report also cautions about emerging challenges that could affect the sector's stability. One major risk is the possibility of demand-supply mismatch.

If the pace of solar tenders, rooftop projects, or export orders slows, domestic manufacturers could face underutilisation of capacity and shrinking profit margins.

Another significant concern is India's dependence on imported raw materials. The country currently relies heavily on China for upstream components like polysilicon, wafers, and cells.

This dependence exposes the industry to price fluctuations, supply chain disruptions, and policy-related risks.

The report also highlights the vulnerability of exports. Although India's solar module exports-especially to the United States-have grown, they remain exposed to international trade regulations, anti-dumping duties, and policy changes under laws like the Inflation Reduction Act. Any sudden shift in global trade rules could disrupt key markets for Indian manufacturers.

In conclusion, while India's solar sector has made impressive progress, its future will depend on sustaining demand, reducing import reliance, and navigating global trade complexities. Companies that can adapt to these changing dynamics are more likely to succeed.

(KNN Bureau)

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