The Manufacturing Divide
This situation highlights a stark contrast in India's renewable energy manufacturing goals. While module assembly has grown exponentially, foundational solar cell production lags far behind, creating an ongoing bottleneck that requires large imports.
India's Critical Cell Shortage
India added a massive 119 GW of solar module manufacturing capacity in 2025, but cell production only increased by 9 GW, reaching about 27 GW. This leaves domestic cell capacity at just 15.3% of module capacity, forcing reliance on 99 GW of imports for modules and cells, with cells making up 75% of this volume. This reliance directly affects costs, as India faces price competition from global leaders, especially China, which controls most polysilicon (93%), wafers (97%), and cells (85%). The ALMM List-II mandate, which requires domestic cells for government projects starting June 2026, will increase demand on limited domestic supply, likely raising costs for utility-scale projects.
Challenges and Company Focus
India's ambition to challenge China's solar supply chain dominance faces significant challenges. Module capacity now stands around 210 GW, far exceeding domestic demand estimates of 40 GW. However, this module overcapacity contrasts sharply with a severe cell shortage. This mismatch means much of the new module capacity will still depend on imported cells, limiting upstream integration. Companies like Waaree Energies are expanding rapidly. Nuvama Institutional Equities maintains a 'Buy' rating with a target price of ₹3,867, citing strong execution and expansion into cell manufacturing by September 2026. However, Waaree's cell capacity, while growing, is part of a sector where domestic cell output is a fraction of module capacity. The sector is increasingly adopting advanced technologies like TOPCon and monocrystalline. Currently, 70% of module capacity uses TOPCon and over 57% of cell capacity uses monocrystalline technology. Still, the overall cost competitiveness of 'Made in India' modules, especially when using imported cells, struggles against fully imported Chinese products. Polysilicon prices, a key upstream component, fluctuate but are expected to grow moderately. Global demand is driven by the solar and semiconductor sectors.
Supply Chain Risks and Tariffs
The biggest weakness is the large deficit in solar cell manufacturing. With module capacity at 210 GW and cell capacity at 27 GW, the industry faces heavy reliance on imports for its expanded assembly lines. This imbalance is worsened by the concentration in cell manufacturing, where the top 10 players control 99.5% of capacity. Furthermore, India has almost no wafer or polysilicon production, making it vulnerable to global supply chain disruptions and price swings, largely set by China's market dominance. India's exports, which heavily depend on the US market (96.8% of modules in 2025), are now at risk from rising US tariffs (up to 50%), causing a sharp drop in shipments. This export collapse requires a strategic shift, but competing in the 'Global South' against established Chinese firms is tough.
Future Growth Prospects
Projected growth in India's solar manufacturing capacity, with module capacity potentially reaching 160 GW and cell capacity 120 GW by 2030, shows a significant effort to fix the current deficit. However, achieving this scale needs investment and overcoming major tech and cost challenges. Analyst firm Nuvama forecasts strong growth for companies like Waaree Energies, projecting higher revenue and EBITDA due to expansion plans. Yet, the industry faces a critical juncture: moving from capacity growth driven by incentives to true cost competitiveness and supply chain independence. Success depends on closing the cell production gap and expanding beyond protected markets.