Solar Module Manufacturing Estimated to Grow by 62%: ICRA

ICRA predicts that the national capacity for manufacturing domestic solar photovoltaic (PV) modules will reach 60 gigawatts (GW) by 2025. According to the rating agency, module manufacturing capacity is projected to increase by 62 percent from the current level of 37 GW to 60 GW. According to ICRA, the capacity awarded under the production-linked incentive (PLI) scheme is expected to drive an increase in the solar power capacity to nearly 100 GW. This growth is fueled by robust policy support and the rising demand from domestic installations.

China dominates the solar photovoltaic (PV) module supply chain, holding more than 80 percent of manufacturing capacity in polysilicon, wafers, cells, and modules. When comparing, it becomes apparent that India has a lower manufacturing capacity, primarily limited to the final manufacturing stage. Over the medium term, the PLI scheme is expected to bring about a transformation by establishing integrated module units in India.

The Government of India (GoI) has awarded incentives for setting up a module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, i.e., from polysilicon to module.

The estimated capital expenditure for establishing these integrated module capacities is expected to surpass Rs 1 lakh crore. It is crucial for domestic solar OEMs to secure a portion of the global demand through exports, considering the substantial increase in manufacturing capacity anticipated.

According to Vikram V, Vice President and Sector Head - Corporate Ratings at ICRA, the ALMM order has been put on hold till March 2024. This, along with the decrease in global module prices, is causing a rise in PV module imports in FY2024. However, the prediction is that there will be an increase in domestic manufacturing capacity in the coming years, along with a resumption of the ALMM order, which will help reduce import reliance.