Author

Mr. Dhruv Khator

12 Jan, 2026 | 10 min Read

Download

Insights of the Report

  • Capacity Surge: India added about 23.5 GW of solar power in FY2025 (17.4 GW large-scale and 5.15 GW rooftop), taking the total to nearly 104.6 GW by March 2025. Another 68.2 GW is on the way, thanks to strong auctions and government support.
  • Manufacturing Boom: India’s domestic solar module capacity has shot past 100 GW, aiming for 125 GW, well beyond the annual demand of 40 GW. This growth comes from the PLI scheme and policy incentives, though some parts still depend on imports.
  • Global Momentum: Around 460 GW of new solar capacity was added worldwide in 2024, with over 500 GW expected in 2025. China leads the charge, while China now ranks 3rd globally, surpassing Japan in total installed solar capacity.
  • Technology Advances: Solar efficiency is nearing 30%, with innovations like bifacial panels, trackers, tandem cells, and thin films gaining traction. Module prices have dropped to about US$0.09/W, and integrating storage and smart systems is making solar projects even more viable.
  • Financial Growth: India’s solar sector earned about US$10.4 billion in 2023 and could touch US$24.9 billion by 2030 (CAGR ~13.4%). Investments include ₹48,120 crore under PLI projects, contributing to an overall $360 billion renewable energy push by 2030.
  • Sustainability Focus: Solar’s carbon footprint (10–50 g CO₂e/kWh) is tiny compared to coal (>1000 g/kWh). As India crosses 100 GW, it’s setting up solar waste and recycling rules to manage an estimated 600,000 tonnes of panel waste by 2040 creating a ₹3,709 crore recycling opportunity by 2047.
Download

Executive Summary

India’s solar panel industry is in the middle of a powerful growth wave, fueled by bold government targets, supportive policies, and falling costs. By 2025, the country crossed the 100 GW solar milestone, adding a record 23.5 GW in FY2025 and building a strong 68 GW project pipeline. Domestic manufacturing capacity has soared past 100 GW under the PLI scheme, though cell and wafer production still depend on imports. Globally, solar installations are rising sharply (460–500 GW/year), placing India among the world’s fastest-growing markets.

Technological development is happening fast: panel efficiency is stepping toward 30%, and innovations such as tandem and bifacial cells, solar trackers, and storage integration will reshape system performance. Financially, the sector generated $10.4 B in 2023 and is set for heavy investment ($360 B by 2030) to reach the 500 GW non fossil goal. However, profit margins are tight amid aggressive tariff competition, cost inflation, and export headwinds such as the 50% US Import tariff.

Sustainability continues to be a central theme. Solar power emits nearly 20× less GHG than coal and conserves vast water resources. India is also moving early on solar waste management, proposing EPR-based recycling norms to handle 6–10 lakh tonnes of panel waste expected over the next few decades.

Looking ahead, the industry’s outlook remains bright but resilience will depend on tackling challenges like oversupply, trade barriers, and supply-chain gaps, while pushing for efficiency, full supply-chain integration, and environmental accountability.

Industry Dynamics

  • Growth Momentum: India’s solar rise is led by utility-scale projects and a fast-growing rooftop segment Rajasthan, Gujarat, and Karnataka together account for ~50 GW of capacity.
  • New Additions: In FY2025, India added 22.5 GW (17.4 GW utility + 5.15 GW rooftop), making solar the top source of new capacity. Execution, however, faces land and grid hurdles despite a 68 GW project pipeline.
  • Manufacturing Surge: Domestic module capacity jumped from 2.3 GW (2014) to 100 GW (2025) under PLI and policy incentives. Major firms like Waaree, Adani, and Tata Power are expanding, though cell and wafer imports remain a weak link.
  • Investment Climate: Backed by stable policies, RPOs, and easy financing, investor confidence is high, but thin margins and rising costs are squeezing profitability.
  • Key Challenges: Persistent land and transmission issues, supply-chain dependence, and trade barriers continue to shape the sector’s growth path.

Sustainability and Environmental Responsibility

  • Clean Energy Advantage: Solar power is one of the cleanest energy sources, emitting only 10–50 gCO₂e/kWh, compared to coal’s 1000+ gCO₂e/kWh. Each unit of solar energy significantly cuts greenhouse gases, curbs air pollution, and uses far less water since it doesn’t require cooling. As India moves toward its 50% non-fossil goal by 2030, solar remains the backbone of this transition.
  • Rising Waste Challenge: Behind its green image, solar manufacturing and disposal do have an environmental cost. With over 100 GW installed, India could see around 600,000 tonnes of solar waste by 2040. To tackle this, the government is introducing Extended Producer Responsibility (EPR) rules, making manufacturers responsible for collecting and recycling old panels to recover valuable materials like silicon, glass, and metals.
  • Circular Economy Opportunity: According to CEEW, India could generate ~11 million tonnes of PV waste by 2047 but also recover resources worth ₹3,700+ crore, avoiding 37 million tonnes of CO₂ emissions. Indian firms and researchers are already exploring advanced recycling methods such as laser separation and solvent recovery, ensuring solar energy stays truly sustainable from production to end-of-life.

Technology and Business Trends

  • Panel Innovation: Crystalline silicon (PERC, TOPCon) dominates with 20–25% efficiency; advanced HJT, IBC, and perovskite-tandem cells (up to 30% efficiency) are emerging. Indian labs are developing high-efficiency prototypes.
  • Systems & Operations:
  • Systems & Operations: Use of bifacial panels, sun-trackers, and AI-driven monitoring boosts yield by 10–30%. String inverters and battery-hybrid projects are becoming standard for better performance and flexibility.
  • Business Models: Rooftop solar is scaling under PM Surya Ghar, while leasing, solar loans, and corporate PPAs drive demand. Utilities are investing in solar parks, hybrids, and open-access models. Export focus is shifting to Asia, Africa, and the Middle East.
  • Cost Trends: Module prices have fallen below $0.09/W, with minor local cost hikes from duties and ALMM norms. Solar’s LCOE is down 90% since 2010, offering 6–10 year paybacks.
  • Outlook: India’s solar landscape is defined by rapid innovation, smarter systems, and expanding global ties, setting the stage for sustained growth and competitiveness.

Financial Outlook

India’s solar panel industry outlook is financially robust but complex. Government incentives and high demand underpin strong revenue growth, while capital expenditure requirements are large. Despite record market expansion, the sector faces margin pressures from intense competition and policy shifts. Key financial aspects are as follows:

Revenue

India’s solar energy market generated around US$10.4 billion in 2023 and is projected to reach ~US$25 billion by 2030 (CAGR ~13.4%). Growth is driven by over 85 GW of new installations in three years and steadily falling solar costs. Long-term PPAs ensure stable revenue streams for developers, but intense price competition has pushed tariffs down to ₹2.0–2.3/kWh, leaving thin project margins despite strong overall revenue growth.

Capital Expenditure and Revenue
  • India needs ~US$360 B in renewables by 2030, with US$190–215 B for solar (300–400 GW).
  • In FY2025 Q1, 6.7 GW was added, implying US$2–3 B quarterly investment.
  • The PLI scheme targets 65 GW of module capacity; ₹48,120 cr (~US$5.5 B) invested so far for 31 GW.
  • Capex in manufacturing and projects is at record highs.
  • Revenues remain sensitive to interest rates and forex, given dollar-linked imports.

Efficiency

High-efficiency panels like mono-PERC, TOPCon, and tandem cells now reach up to ~30% efficiency, generating more power per unit area and improving project returns. Bifacial modules, trackers, and lightweight structures further boost energy yield. Falling polysilicon and wafer prices (down 27–43% in 2024) have lowered capex and improved IRRs, though price swings from global overcapacity remain a risk. Strong O&M practices are essential to maintain output and ensure long-term profitability.

Profitability
  • Margin Pressure: Overcapacity and aggressive PLI bidding have squeezed manufacturer margins.
  • Risk Exposure: IEEFA/JMK warns PLI awardees could lose up to ₹41,834 crore (~US$4.8 B) if targets aren’t met.
  • Thin Developer Margins: Record-low tariffs (~₹2.0–2.3/kWh) leave little room for error delays or grid issues can erase profits.
  • Diversification Moves: Firms are expanding into storage, hybrid projects, and services to stabilize returns.
  • Overall Outlook: Despite strong revenue growth, profitability stays modest, driven by input costs (modules ~50% of total) and policy changes like duties or subsidy shifts.

Investment Areas

  • Upstream Integration: Focus on building domestic polysilicon and wafer production to reduce import dependence; current PLI allocations cover 5.3 GW wafer and 29 GW cell capacity by mid-2025.
  • Recycling & Circularity: Invest in solar module recycling facilities CEEW projects potential recovery of ₹3,709 crore in materials by 2047, cutting raw material demand.
  • R&D & Innovation: Strengthen research in next-gen PV tech, including high-efficiency modules, coatings, and nanomaterials, to boost performance and competitiveness.
  • Energy Storage & Digitalization: Grow investments in battery energy storage systems (BESS) and digital platforms for energy management and predictive maintenance.
  • Capacity Planning: Expand manufacturing strategically to avoid oversupply, as WoodMac warns of up to 29 GW unsold inventory by 2025 if capacity outpaces demand.

Risk Areas

  • Overcapacity: Domestic module capacity may hit ~125 GW by 2025 vs. 30–40 GW demand, creating inventory risk (~29 GW stock) and price pressure.
  • Trade & Policy Barriers: US/EU tariffs (e.g., 50% on modules) cut exports (US shipments down 52% in H1 2025). Frequent ALMM/BIS rule changes add policy uncertainty.
  • Supply Chain Dependence: Heavy reliance on imported polysilicon, wafers, and glass makes costs vulnerable to price swings or trade disruptions.
  • Grid Constraints: Limited transmission capacity and lack of storage can cause curtailment, lowering project revenues and delaying commissioning.
  • Financial Pressure: Low tariffs and tight margins raise exposure to cost overruns, FX risks, and interest rate hikes; PLI non-compliance may trigger penalties.
  • Environmental & Compliance Risk: Improper solar waste management could invite regulatory or reputational backlash under new EPR recycling rules.

Strategic Imperatives

  • Upstream Integration: Build domestic polysilicon and wafer capacity through extended PLI support and global JVs to cut costs and strengthen supply resilience.
  • Innovation Leadership: Invest in high-efficiency PV tech (perovskite, tandem, smart modules) and expand into clean-tech areas like storage, grid software, and green hydrogen.
  • Market Diversification: Reduce export risk by targeting new regions (Africa, Asia, LATAM) and boosting domestic rooftop, floating, and agrivoltaic projects.
  • Operational Efficiency: Improve project execution, O&M quality, and digital asset management to protect margins and enhance performance.
  • Regulatory Engagement: Collaborate with policymakers for stable, transparent rules and advocate incentives (e.g., VGF for tough segments).
  • Circular Economy: Develop solar recycling infrastructure, pilot take-back programs, and turn EPR compliance into a sustainability-driven business opportunity.

Key takeaways

  • India’s solar panel industry is booming: over 104 GW installed by 2025(85.6 GW large-scale), with record additions (23.8 GW in FY2025) and huge pipelines.
  • Domestic module manufacturing has exploded (>100 GW capacity by 2025), largely thanks to the PLI scheme, but this creates an oversupply risk (29 GW surplus projected).
  • Global context: Renewable energy is expanding rapidly (460 GW PV in 2024). India ranks 4th worldwide in solar capacity and leads growth rates.
  • Solar panels are getting more efficient (~30% conversion) and cheaper (module prices ~$0.09/W), improving the economics of solar projects.
  • Financially, India’s solar market is already ~$10 B (2023) and growing at ~13% annually. Vast investments (~$360 B by 2030) are planned to hit targets, highlighting big business opportunities.
  • Risks: Trade disputes (US/EU tariffs reduce exports by ~52%), supply-chain gaps (reliance on imported wafers/polysilicon), aggressive bidding (thin profit margins) and emerging waste disposal challenges (600k t by 2040) threaten industry health.
  • Sustainability: Solar delivers huge environmental benefits (coal emits ~20× more CO₂ than solar) and aligns with India’s climate goals. New policies (EPR and recycling mandates) are being put in place to ensure solar’s life-cycle remains green.
  • Strategic imperatives: To succeed, industry players must integrate vertically (invest in upstream production and recycling), adopt advanced technology (high-efficiency cells, storage hybrids), and maintain financial discipline. Policymakers and businesses alike should foster stable policies and invest in a circular economy for solar.