India's solar sector at an inflection point as risks of oversupply, trade disruptions looming industry: Report

India's solar sector is at an inflection point where demand signals, trade flows and technology shifts will determine players to survive or gets squeezed, according to a report by Yes Securities.The report highlighted that the India's module and cell capacity has scaled aggressively in the last few years. Module capacity has touched nearly 100 GW, while cell capacity has already crossed 25 GW, driven by supportive policies such as the Production Linked Incentive (PLI) scheme, Basic Customs Duty (BCD) incentive, Approved List of Models and Manufacturers (ALMM) and a wave of large capex announcements.However, the report highlighted that scale alone does not eliminate risks for the sector. One of the major risks flagged is the demand and off-take mismatch.It stated "The sector now sits at an inflection point where policy, input markets, demand signals, trade flows and technology shifts will determine which players survive and who gets squeezed".India's nameplate module capacity has risen from the high-teens to nearly 100 GW within a short period, while further planned additions could push total nameplate capacity to around 160-170 GW by 2028, as per industry roadmaps.

The report warned that if domestic tenders, export windows such as the US and EU, or rooftop solar uptake slow down, utilisation levels could fall sharply, leading to margin compression.

It added that oversupply is not a hypothetical concern, with inventory and price pressures already visible in China and other global markets.The report further noted that India's solar manufacturing continues to remain dependent on China for critical upstream inputs such as polysilicon, wafers and cells.

China still accounts for more than 80 per cent of the share across these stages, according to the International Energy Agency. This leaves Indian module makers exposed to raw material bottlenecks, price shocks and the risk of diplomatic or trade-related disruptions.

Polysilicon prices, for instance, witnessed sharp declines in 2024 but continue to remain volatile, giving Chinese incumbents a structural advantage.At the same time, Indian solar module exports have surged in recent years, particularly to the US. However, the report cautioned that export demand is heavily dependent on external trade rules, including the Inflation Reduction Act (IRA), US anti-circumvention policies and countervailing or anti-dumping actions in Southeast Asia.

A sudden change in duties or trade findings could shut export opportunities, leaving domestic producers with surplus capacity and weaker realisations.