Description

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Context:

Over the past two years, Indian solar module makers have rapidly expanded capacity to around 100 gigawatts (GW).

Introduction

India has rapidly scaled up solar module production to around 100 GW, signaling its ambition to achieve its clean energy targets. However, a recent SBI Capital Markets report warns of looming oversupply risks, especially as US export incentives dwindle, potentially straining domestic industry dynamics amid falling international demand.

Production Growth & Domestic Demand

Within two years, Indian companies—from Waaree Energies to Reliance—scaled module capacity to 100 GW.
Domestic solar installations also surged, with 24 GW added in FY25—a year-on-year jump of 60%, requiring around 50 GWdc of modules.
Forthcoming annual additions are expected at 40–50 GW, and installations may reach 190 GW by 2027, justifying much of the current capacity.

Export Slowdown & Market Risk

Exports, previously a critical outlet, are shrinking as the US removes incentives for imported solar modules.
Indian PV exports to the US have soared in recent years—but US policy changes now limit this growth.
The SBI report warns of a looming supply glut unless export avenues or domestic absorption are found.

Structural Gaps

While module production flourishes, cell manufacturing capacity remains under 30 GW, creating a structural bottleneck.
India plans to scale up domestic cell capacity through APPROVED LIST OF MODELS AND MANUFACTURERS (ALMM)-II—effective August 31, 2025, which mandates enlisted domestic cells in government and commercial bids.
Until these measures take full effect, reliance on imported cells (often at higher costs) may persist and strain competitive pricing.

No ISTS Charges Waiver for Solar, Wind Projects Commissioned after June 2028:

Category	Waiver Eligibility & Duration
Solar/Wind/Hybrid Projects	Commissioned on or before 30 June 2025 → 100% ISTS waiver for 25 years. Commissioned after 30 June 2025 up to 30 June 2028 → Graduated waiver: 75%, then 50%, then 25%. Commissioned after 30 June 2028 → No waiver.
Battery Energy Storage Systems (BESS)	Co-located with renewables, commissioned on or before 30 June 2028 → 100% waiver. Non-co-located BESS → Graded waiver, phased out by 30 June 2028.
Pumped Storage Hydropower (PSP)	Construction awarded on or before 30 June 2028 → 100% waiver.
Hydropower (New projects)	Projects with PPAs or construction awards between Dec 2022 and Jun 2028 → 18-year waiver, percentage depending on date. No waiver after 30 June 2028.
Offshore Wind Projects	Commissioned up to 31 December 2035 → Waiver gradually declines from 100% to 25% depending on commissioning year. No waiver after 31 Dec 2035.
Green Hydrogen & Ammonia	Projects commissioned up to 31 December 2033 → Waivers from 100% to 25%, based on commissioning year. Waiver applies if ≥ 51% power is from renewables/hydro/ESS.
Force Majeure Extensions	Projects facing uncontrollable delays can get up to two extensions of 6 months each, preserving waiver eligibility.
Compliance via Self-Declaration	BESS projects can self-declare 51% renewable usage; compliance verified annually. Non-compliance → billing without waiver.
Terminal Bay Charge Clause	If the terminal bay is energized but generation is delayed, the connectivity guarantor bears associated transmission charges.

Current State of Renewable Energy Development in India

Dimension	Details
Global Status	- 3rd in Solar, 4th in Wind, 4th in total RE capacity. - Solar: 2.63 GW (2014) → 108 GW (2025). - Wind: 51+ GW. - Targets: 500 GW non-fossil by 2030; 1,800 GW by 2047.
Reforms Undertaken	- Market-driven bidding replaced feed-in tariffs → tariffs fell from ₹10.95/unit (2010) to ₹1.99/unit (2021). - Waiver of Inter-State Transmission System (ISTS) charges → barrier-free RE flow across states.
Flagship Programs & Initiatives	- PLI Scheme: Solar module capacity doubled (38 GW in Mar 2024 → 74 GW in Mar 2025). - PM Surya Ghar Yojana: 30 GW decentralized rooftop solar; 10 lakh households onboarded. - PM-KUSUM: 60% subsidy for solar pumps; farmer income + daytime power. - National Green Hydrogen Mission (NGHM): 5 MMT green hydrogen by 2030; supported by Green Energy Corridors. - Ethanol Blending Programme (EBP): Blending rose from 1.5% (2013) → 15% (2024); saved ₹1.26 lakh crore forex. - SATAT Initiative: 100+ CBG plants; 5% blending mandate by 2028.
Emerging Frontiers	- Offshore Wind: 37 GW tenders by 2030; pilots in Gujarat & Tamil Nadu. - Hybrid & RTC Power Policy: Wind-solar hybrids + FDRE for 24/7 clean energy.
Investment & Global Leadership	- International Solar Alliance (ISA): 100+ countries under One Sun, One World, One Grid. - FDI in RE: ~8% of inflows in FY25 (up from 1% in FY21). - RE-Invest 2024: Global investors committed ₹32.45 lakh crore by 2030.

Global Context

The global solar industry is already grappling with systemic overcapacity and plunging prices, affecting producer margins worldwide.
Countries often deploy trade instruments like tariffs and domestic subsidies to protect local manufacturers. For instance, the US has imposed tariffs that raise solar module prices—examples from Southeast Asia show duties as steep as thousands of percent.
Similar strategic resilience and trade-opportunity approaches are recommended for India—improving logistics, accelerating infrastructure, and implementing anti-dumping norms to protect domestic industry.

Way Forward

Dimension	Current Scenario & Concern	Suggested Course of Action
Domestic Demand	Strong, but capacity may exceed absorption by 2027	Maintain policy support while balancing production speed
Export Markets	Slowing, especially in the US	Diversify exports (Africa, South America), invest in upstream
Structural Weakness	Weak domestic cell ecosystem	Fast-track ALMM-II and incentivize upstream investments
Global Oversupply	Price pressures and volatility	Strengthen trade defense, build cost efficiencies
Strategic Policy	Facing policy uncertainty globally	Focus on infrastructure, credit access, ease of doing business

Conclusion

India’s climb in solar module manufacturing is a vital step towards energy independence and achieving the 500 GW RE by 2030 goal under Paris commitments. But unchecked, this growth may transform into a glut—undermining profitability and long-term sustainability. Policy focus must now shift to building a resilient ecosystem: scaling up cells, diversifying markets, and enhancing trade defenses. Smart, balanced policymaking will ensure India harnesses solar power not just quantitatively, but sustainably.

READ- SOLAR POWER IN INDIA - IAS Gyan

Source: DOWN TO EARTH

PRACTICE QUESTION

Q. India has rapidly expanded solar module manufacturing to 100 GW. Critically analyze the opportunities and challenges of this growth in the context of domestic energy goals and global market risks. (250 words)