India's solar manufacturing boom has turned into a glut, with the country's own success becoming its downfall. The Indian solar manufacturing industry is facing a unique challenge: a surge in production that has outpaced domestic demand. Since 2020, India's solar manufacturing capacity has skyrocketed by 13 times, thanks to a push to expand local production encouraged by pandemic disruptions and strained relations with China. This rapid growth has resulted in a surplus of solar modules, with capacity utilization at module-assembly plants shrinking to around 40% from over 70% in the year through March 2023. The situation is further complicated by the fact that India's demand hasn't kept pace with the surge in production. While domestic consumption is increasing, the country's manufacturing capacity of about 154 gigawatts at the end of the year dwarfs the demand. The problem is exacerbated by the fact that India continues to depend on China for upstream components such as cells and wafers, and new mandates are likely to transform even that segment. As a result, manufacturers are beginning to pull back from lower-value output, and the market is facing a glut of solar modules. The situation is further complicated by the uncertainty surrounding exports, with tariffs and anti-dumping investigations looming over the market. The Alliance for American Solar Manufacturing and Trade has sought duties of almost 214% to curb supplies from India. One solution is to find alternative markets overseas, including by following China's lead and leveraging the Export-Import Bank of India to finance solar power projects in regions like Africa, with a mandate that it uses Indian-made modules. However, in the near term, industry executives say that not everyone will survive the glut, particularly as technology evolves and less-advanced companies struggle to keep up investments. The situation is further complicated by the fact that nearly 30 gigawatts of India's module capacity uses MonoPERC cells that are fast becoming obsolete with the advent of more efficient technologies, leading to regular and costly technology upgrades. Eventually, it's going to be a 'big boys' club', said Mathur, CEO of module maker Saatvik Green Energy. The Indian solar manufacturing industry is facing a challenging time, and it remains to be seen how the market will adapt to the glut and the changing landscape.
