- US tariffs on Indian solar exports worsen the domestic supply glut, lowering prices and squeezing manufacturers’ profit margins.
- The policy shift accelerates consolidation in India’s solar sector as smaller firms struggle to stay competitive.
The United States’ decision to impose tariffs on solar imports has disrupted India’s solar manufacturing sector, according to ICRA. These tariffs forced Indian exporters to divert their shipments back to the local market, creating oversupply and driving prices lower.
The resulting glut has intensified pressure on profit margins. Smaller manufacturers are struggling to survive, while larger, vertically integrated firms are gaining market strength.
ICRA projects that India’s solar photovoltaic (PV) module capacity will grow from 109 GW to more than 165 GW by March 2027. This expansion is supported by key policies, including the Approved List of Models and Manufacturers (ALMM), Basic Customs Duty (BCD), and the Production-Linked Incentive (PLI) scheme. However, with annual domestic installations expected to stay around 45–50 GW, production could far exceed demand.
ICRA’s Ankit Jain explained that US tariffs and regulatory uncertainty will likely reduce exports and add pricing pressure. He warned that profitability, currently near 25%, could drop as competition intensifies and margins shrink.
China still dominates global solar manufacturing. It controls over 90% of polysilicon and wafer production and about 80–85% of solar cells and modules, exposing Indian manufacturers to geopolitical and supply chain risks.
From June 2026, India’s ALMM List-II will aim to boost domestic solar cell manufacturing. ICRA expects capacity to rise from 17.9 GW to 100 GW by December 2027. However, modules made with Indian cells may cost 3–4 cents more per watt than imported ones, reducing global competitiveness.
Despite short-term challenges, ICRA believes vertically integrated firms will benefit in the long term. They will gain stronger control over their supply chains and reduce dependency on imports. Yet, trade barriers, slower export demand, and rapid capacity growth will continue to put pressure on profits. The industry now faces a period of structural transformation, redefining the future of India’s solar manufacturing landscape.