This sharp contraction in overseas shipments has been attributed by industry officials and analysts primarily to the implementation of new trade measures by the US, a key export market.
These US restrictions have effectively curbed the flow of Indian-manufactured solar modules across the Pacific.
In response to this significant obstacle in the international market, domestic solar module manufacturers have been compelled to execute a strategic pivot, according to a Reuters report.
A substantial volume of supplies that were previously earmarked for export channels has now been redirected toward the burgeoning domestic Indian market.
This redirection is seen as a necessary move to mitigate the financial impact of lost export revenue and to maintain production capacity utilisation.
The shift is expected to increase the availability of solar components within India, potentially accelerating the pace of domestic solar power installation projects.
Exports to US
India’s exports of solar modules and components to the US experienced a significant surge earlier this year.
This sharp increase was primarily driven by solar power developers in the US actively seeking alternative suppliers to Chinese manufacturers.
The search for non-Chinese sources intensified following the imposition of various restrictions and tariffs by the Washington administration on products originating from China, particularly within the renewable energy sector.
These US policies, aimed at addressing concerns over forced labor, trade imbalances, and national security, created a compelling market opportunity for Indian solar panel manufacturers.
As developers pivoted their supply chains away from China to mitigate risks and comply with regulations, India emerged as a viable and increasingly attractive hub for fulfilling the growing demand for solar technology in the American market.
This shift not only boosted India’s export figures but also underscored the evolving dynamics of the global solar supply chain.
The US has intensified its scrutiny of imports from India, which previously accounted for over 90% of India’s module exports.
This follows the 50% tariff imposed on Indian goods during the Trump administration and is part of an investigation into whether Chinese-made components are being shipped via India.
Government data indicates a significant drop in India’s solar module exports, falling to approximately $80 million in September from $134 million in August.
According to ICRA, India’s present approved solar module manufacturing capacity is approximately 110 gigawatts, with projections indicating it will exceed 165 GW by March 2027.
Domestic oversupply
However, fears of oversupply in the domestic market have been intensified by the slump in overseas demand.
This is particularly concerning because annual solar installations within the country are still short of the 44–45 GW required to achieve the 2030 renewable targets.
Smaller, module-only firms are anticipated to consolidate as their margins face pressure, according to analysts.
They believe vertically integrated companies, possessing both cell and wafer capacity, are better positioned to withstand the market downturn.
According to a letter reviewed by Reuters, the All India Solar Industries Association asked the Indian Banks’ Association in August to halt financing for new, unprofitable module-making projects in an effort to prevent future bankruptcies.
Indian companies are increasingly shifting their focus toward manufacturing cells, ingots, and wafers, prioritising these upstream components over solely producing modules.
For instance, Solex Energy has revised its strategy and has decreased its planned module capacity from 15 GW to 10 GW.
Simultaneously, the company has substantially increased its cell production target from an initial 5 GW to 10 GW.
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