New Delhi, Sep 24 (NationPress) India's solar module and cell capacity is projected to reach 200 gigawatt-peak (GWp) and 100 GWp, respectively, by the end of FY28. This growth is expected to exceed the annual domestic module demand of 50 GWp over the next three years, according to a report released on Wednesday.

Integrated players in the solar sector are anticipated to be more robust against margin pressures, which may lead to the consolidation of smaller module capacities.

As of July 2025, India's module manufacturing capacity was at 118 GWp, while cell manufacturing capacity was recorded at 27 GWp. However, the effective operational capacity is estimated to be between 80-85 GWp for modules and 11-13 GWp for cells, with the remaining capacity still in a stabilisation phase, as reported by CareEdge Ratings.

Annual production is forecasted to be in the range of 50-60 GWp for modules and 8-10 GWp for cells, which results in an import dependency of 40-45 GWp for cells, the report indicated.

This rapid capacity expansion has been spurred by an increase in solar installations, proactive policy support, and enhanced financing options.

Furthermore, domestic cell manufacturing capacity is expected to hit 100 GWp during the same timeframe, with capital expenditure projected to exceed Rs 55,000 crore, driven by backward integration strategies.

Consequently, module production is likely to increasingly depend on exports, while cell production may also surpass domestic demand in the medium term.

While standalone module manufacturers could face risks of consolidation, integrated players are likely to endure margin pressures due to cost efficiencies.

Jatin Arya, Director of CareEdge Ratings, noted, "The solar equipment manufacturing sector benefits from several supportive factors, including a strong domestic demand outlook, maturing module capacities, favourable government policies, and improved financing avenues for the renewable energy sector."

Nevertheless, challenges such as the nascent integration of solar equipment capacity, reliance on Chinese supply chains, uncertainties in export prospects, and delays in renewable energy capacity additions due to systemic issues remain key factors to watch in the medium term.

The report also pointed out that a reduction in GST rates could result in project cost savings of 4-5 percent.

Additionally, tightening regulations in the US may affect India's module exports, although the medium-term outlook appears bright, provided Indian manufacturers manage compliance and maintain cost competitiveness.