India’s solar cell manufacturing capacity is set to touch 50-55 GW by fiscal 2027, up five-fold from 10 GW at the end of fiscal 2024, supported by the government’s policy thrust to reduce imports of cells and modules, as per Crisil Ratings.
The expansion is expected to entail a capital expenditure of Rs 28,000-30,000 crore, likely to be funded through a 70:30 debt-equity mix. “That said, healthy balance sheets and robust cash accrual will support credit quality,” said Crisil.
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“To boost domestic demand and cell making capacity, the government has mandated use of cells only from its approved list of cell manufacturers in open access and net metering projects and projects where it is either providing funding assistance or acting as a counterparty. Among other measures, the Production-Linked Incentive (PLI) scheme and domestic content requirement, too, will invigorate local manufacturing,” said Ankit Hakhu, Director, Crisil Ratings. “All these have led to cell capacity expansion announcements of 45-50 GW, which will take India’s overall cell making capacity to ~55 GW over the next two fiscal years,” he said.
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However, the country’s dependence on imports of cell may rise in the shorter term before adequate domestic capacity gets built up.
The country’s module manufacturing capacity had increased to nearly 60 GW by March 2024 from around 7 GW in March 2020. This has ensured module imports decline to 25% of total consumption this fiscal from 45% in the last, as per data provided by Crisil. However, import of cells – a key input for module manufacturing – remains high at 80% with majority imports coming from China.
“With domestic cell supply inadequate, import dependence could rise given likely renewable capacity addition,” the agency said. Crisil Ratings expects 60-65 GW of solar capacity to be added over the two fiscals by 2027.
Analysts noted that in a domestically manufactured cell, potentially 70-80% of the module cost can get captured within India (vis-à-vis only 40-50% without it).
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