It is likely to increase to nearly 100 GW as the capacity awarded under PLI scheme comes on stream, led by the strong policy support and growing demand from domestic solar power installations
ICRA forecasts that India's domestic solar photovoltaic (PV) module manufacturing capacity will reach 60 gigawatts (GW) by 2025. This would represent a 62% increase from the current capacity of 37 GW, driven by the production-linked incentive (PLI) scheme and strong policy support.
As the PLI scheme is implemented, it is expected that the manufacturing capacity will nearly double to around 100 GW. Currently, the solar PV module supply chain is dominated by China, which accounts for over 80% of the manufacturing capacity across polysilicon, wafer cells, and modules. India's manufacturing capacity is relatively low and mainly concentrated in the final manufacturing stage.
The PLI scheme is set to change this landscape, with integrated module units expected to emerge in India in the medium term. The Government of India has awarded incentives for setting up a module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, covering the entire process from polysilicon to modules.
The estimated capital expenditure for establishing these integrated module capacities exceeds Rs 1 lakh crore. To ensure the success of domestic solar original equipment manufacturers (OEMs), it will be crucial to secure a share of the global demand through exports.
Vikram V, Vice President and Sector Head of Corporate Ratings at ICRA, stated that imports of PV modules are expected to rise in FY2024 due to the postponement of the Approved List of Models and Manufacturers (ALMM) order until March 2024.
And with a significant drop in global module prices, the expected expansion of domestic manufacturing capacity with backward integration over the next two to three years, along with the resumption of the ALMM order, is anticipated to reduce import dependence.
Besides module capacity, OEMs are also likely to increase their wafer and cell manufacturing capacities, with cell capacity expected to grow to over 25 GW by 2025 from the current level of 6 GW. However, India will continue to rely on polysilicon imports due to the longer time and larger capital investment required to establish these capacities.