Indian Solar PV Module Manufacturing Capacity To Cross 60 GW By 2025: Icra

The rating agency Icra expects the solar photovoltaic (PV) module manufacturing capacity in India to increase to over 60 GW by 2025 from the current level of ~37 GW, with improved backward integration into cell and wafer manufacturing. 

This is likely to further enhance to nearly 100 GW as the capacity awarded under the production-linked incentive (PLI) scheme comes on stream, led by the strong policy support and growing demand from domestic solar power installations. 

The policy measures include the notification of an approved list of models and manufacturers (ALMM) comprising only domestic manufacturers, imposition of basic customs duty on imported cells and modules and the PLI scheme. 

Further, the solar power generation capacity is expected to witness significant growth over the coming decade on the back of India’s climate transition goals, in turn driving the demand for solar PV modules, Icra added.

Vikram V, Vice President and Sector Head- Corporate Ratings, Icra said: “While the abeyance of the ALMM order till March 2024 and a sharp decline in global module prices is leading to an increase in PV module imports in FY2024, the expected scale-up in domestic manufacturing capacity with backward integration over the next two to three years, along with the resumption of the ALMM order, is expected to reduce import dependence."

He added that apart from module capacity, the OEMs are expected to enhance the wafer and cell manufacturing capacities with cell capacity expected to cross 25 GW by 2025 from the current level of 6 GW. However, the country will remain dependent on polysilicon imports as these capacities are likely to take longer to set up, involving a larger capital investment.

Notably, the solar PV module supply chain is dominated by China, with over 80 per cent share in manufacturing capacity across polysilicon, wafer, cell and modules. In comparison, the manufacturing capacity in India is relatively low and is largely restricted to the last manufacturing stage. The PLI scheme is expected to change this, with integrated module units expected to come up in India over the medium term.  

The Centre has awarded incentives for setting up a module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, i.e., from polysilicon to module. The capex outlay for setting up these integrated module capacities is estimated to exceed Rs 1.0 lakh crore. 

Icra also stated that given the significant scale-up expected in manufacturing capacity, garnering a share of the global demand through exports would remain critical for domestic solar OEMs.