Oversupply, Giants, Tariffs Clover India’s Solar Milestone
India’s solar sector hits 100 GW capacity with IPOs and global recognition, but oversupply, squeezed exports, and big entrants spark consolidation.
India’s solar manufacturing sector hit a milestone that few other industries in the country can boast of — 100 gigawatt (GW) of solar module manufacturing capacity, ranking among the top solar manufacturers in the world.
India’s Ministry for Renewable Energy marked the milestone achieved in August as a turning point in India’s clean energy ambitions. This achievement has come along with all the typical hallmarks of a sector at its peak — entry of the giants, anticipation of consolidation and an IPO rush.
But growth has also brought with it some growing pains — the IPO pipeline is crowded, US tariffs have shrunk India’s biggest export market for modules, and the looming shadow of the Reliance Industries and Adani Enterprises entering the industry.
IPO Fever
The timing of the milestone has coincided with the rush to go public. There are about half a dozen solar module companies in India, at different stages of tapping the IPO market in the next one year. Vikram Solar (capacity of 4.5 GW modules) raised Rs 2079 crore with an oversubscribed offering, followed by Satvik Green Energy’s (operational capacity of 3.8 GW modules) for Rs 900 crore issue.
Robust policy support, aggressive renewable targets, and growing domestic demand as factors contributing to the “high hopes for India's solar module industry,” said Arun Kailasan, research analyst at Geojit Investments.
Since 2021, the Indian government took a series of steps to boost domestic equipment manufacturing in solar, including a Production Linked Incentive scheme worth an initial outlay of Rs 4500 crore and the introduction of basic customs duty on the import of solar cells and modules (which was later reduced in the last Budget announcements). Starting April 2024, the Indian Government also reinstated the Approved List of Models and Manufacturers (ALMM) rule for solar modules, which requires domestic sourcing of solar modules.
Kailasan said all these measures reinforced the industry's foundations.
Goldi Green, Rayzon ($170 million), Jupiter Solar ($300 million), Emmvee Solar ($340 million), are some of the existing module manufacturers looking to raise IPO funds in the next 12 months, according to reports.
Others, such as Inox Clean Energy ($850 million), plan to raise funds to add their maiden cell and module manufacturing capacities, amongst other expansions, reports note.
Cart Before the Horse
Behind the IPO rush lurks a larger problem. The solar module industry appears to be getting ahead of itself.
“The module manufacturing capacity in India has scaled up significantly over the past three years to reach 100 GW driven by strong policy support. This is also given the fact that the annual solar capacity installations are expected to be in the range of 35-40 GW over the near to medium term, against the installed manufacturing capacity of 100 GW,” noted Rachit Mehta, Vice President & Sector Head, ICRA Ltd.
Others at SBI Caps estimate solar module capacity to reach 190 GW by 2027, which the firm noted, could contribute to an oversupply considering reduced scope for exports due to actions by the US in removing incentives for solar projects.
They pegged solar capacity additions “to hover ~40-50 GW in the coming years to achieve targets, needing a steady state capacity of 100 GW of modules,” lower than the expected manufacturing capacity of 190 GW of modules.
In a July report, rating agency Crisil estimated the current utilisation rate of the module capacity in India at 50%
Export Setbacks
For years, exports offered a cushion for the industry. India’s solar module exports to the US have been on a meteoric rise, peaking at $1.93 billion in FY24 and settling at $1.08 billion in FY25.
ICRA expects that with the recent imposition of US tariffs, the redirection of modules from export market to the domestic market could lead to pricing pressure for the Original Equipment Manufacturers (OEMs) to a certain extent.
To things in context, India’s overall exports in this segment totalled to $1.96 billion in FY24 and $1.12 billion in FY25. The dip in FY25 is also due to India’s own module demand increasing owing to ALMM policies. The US administration's directive to halt funding from the Inflation Reduction Act (IRA) has also impacted India’s green exports to the country.
Mehta said, “The OEMs will have to explore other export markets such as the European Union, the United Kingdom, the Middle East and Africa for the modules; however, they will face stiff competition from other module exporting countries such as China, Vietnam, Thailand, among others.”
For investors weighing upcoming IPOs, like Kailasan from Geojit, export uncertainty is a top risk.
They will closely scan for risks related to oversupply, reliance on raw materials, and new technological advancements.
The Giants Arrive
As if tariffs and oversupply weren’t enough, the industry is also faced with the entry of India’s two biggest conglomerates — Reliance Industries and Adani Enterprises. Both companies are investing billions to establish integrated operations across the solar value chain — from polysilicon to modules. Each is targeting 10 GW of capacity.
“They can both kill the competition,” analysts at Bernstein wrote in a recent report on the new energy sector. Crisil, in its note highlights that smaller firms are currently running at high operational costs.
Reliance has publicly stated ambitions to be present “from sand to modules,” while Adani’s solar business is already selling modules even as it waits for its green hydrogen value chain to come online.
Sand to modules refers to the entire chain starting from polysilicon (made from sand), through ingot, wafers, solar cells, solar modules, and its covering glass, finally to build the solar panels that are arranged in a solar energy plant.
Smaller firms, lacking similar balance sheet strength, may struggle to survive.
The Consolidation Game
Bernstein Report also pointed out that eventually, the government could pull back import protection “from cells to wafers and then polysilicon”.
It is then that the big two giants would be able to leverage their presence across the value chain to maximise gains “and inundate the market with their cheap cells and modules, eliminating competition downstream - eventually driving consolidation.”
What Next?
Kailasan from Geojit added future IPOs may concentrate on strengthening supply chains and increasing capacity, as businesses are increasingly pursuing backward integration to lower supply chain risks and enhance unit economics.
Many of those module manufacturers planning to raise money have proposed cell plants, which Bernstein highlights will help them differentiate, while integrated players – like Reliance, Adani and others- attempt to leapfrog to the top of the food chain.
While both conglomerates are setting up these capacities to feed their own green energy production, third-party sale is not ruled out. Adani Enterprises has been selling modules while it waits for its entire green hydrogen value chain to fall into place.
Recent commentary from RIL’s executives, “With respect to the sale to the external parties, we are already opportunistically looking at it, but our capital requirements are itself so large,” hints they, too, may be open for business.
