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SBI Capital Warns of Potential Solar Oversupply in India by 2027

India’s solar sector, despite robust growth, may face a looming oversupply crisis by 2027, according to a report by SBI Capital. Cumulative solar installations are projected to touch 190 GW, while the domestic module manufacturing ecosystem has already expanded to nearly 100 GW. This rapid expansion, propelled by schemes such as the Production Linked Incentive (PLI) and the Approved List of Models and Manufacturers (ALMM), risks outpacing demand.

Currently, India’s annual solar capacity additions are expected to stabilize at 40–50 GW in the coming years to meet renewable energy targets. However, the surge in manufacturing has created a mismatch. In FY25 alone, installations grew 60% year-on-year to 24 GW, pushing module demand to 50 GWdc. Yet, India’s solar cell manufacturing capacity remains under 30 GW, exposing a gap between module and cell production.

The challenge is compounded by declining export opportunities. The United States, a major buyer of Indian solar modules after restricting Chinese imports, is now rolling back certain incentives, reducing the export window for Indian firms. This could leave domestic manufacturers grappling with underutilized capacity if demand does not keep pace.

While the growth of India’s solar manufacturing reflects strong policy support and the vision of self-reliance under “Atmanirbhar Bharat,” the report highlights the need for balanced capacity creation aligned with actual demand. Without stronger international market access and domestic demand acceleration, the risk of excess supply could squeeze margins and create financial stress for manufacturers.

The findings underline the importance of synchronizing policy, manufacturing growth, and deployment targets to ensure India’s clean energy transition remains both sustainable and profitable.