New Delhi [India], March 7 (ANI): The solar industry will continue to face a demand-supply mismatch, despite a significant surge in cell manufacturing capacity over the next two years, according to a report by Share India.
The production of solar modules is expected to rise from 8 gigawatts (GW) to 50 GW by the financial year 2027. The report adds that the demand-supply mismatch in the sector is likely to widen.
Despite the sharp rise in cell production, the report highlights that the demand-supply gap is likely to remain wide as incremental cell capacity additions are expected to be concentrated toward the latter part of the two years.
According to the report, a major factor contributing to this imbalance is the introduction of ALMM-II regulations in June 2026 (FY27), which will restrict the use of imported cells in government projects.
The anticipated changes in import regulations due to ALMM-II further complicate the situation, as domestic manufacturers will struggle to meet government project needs without the flexibility to rely on imported cells.
This regulation will impact the solar value chain by limiting the availability of cells for use in government-backed initiatives, leading to a potential supply crunch in the domestic market.
While manufacturers are rapidly expanding capacity, the restrictions on cell imports will significantly affect the ability to meet demand for solar modules, especially in government projects.
The report outlines four key concerns of the industry over a potential oversupply of solar modules and cells.
It says aggressive planned production expansions could exert downward pressure on prices and lead to margin compression across the value chain but the demand-supply gap will persist.
The report noted that the market is also grappling with several additional issues, like the surge in cell capacity, the potential oversupply of modules, the impact of import duty cuts on cells and PV modules, and the threat of tariffs on exports to the USA, which could create domestic overcapacity in the short term.
While concerns about oversupply are prevalent, the report suggests many of these issues have been overstated.
The imposition of customs duties and the reinstatement of ALMM-I in FY25 have already reduced module imports, leading to a demand-supply mismatch for domestic manufacturers.
Over the next two years, demand for solar modules is expected to outpace supply, with an estimated 35-40 GW needed annually, the report added.
India’s solar power sector has witnessed an extraordinary 3,450 per cent increase in capacity over the past decade, rising from 2.82 GW in 2014 to 100 GW in 2025, as per the official data.
As of January 31, 2025, India’s total solar capacity installed stands at 100.33 GW, with 84.10 GW under implementation and an additional 47.49 GW under tendering. (ANI)
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