India’s solar-panel exports plunged to their lowest level this year in September 2025, as tighter US tariffs and increased scrutiny of supply chains constrained shipments. The drop signals rising headwinds for India’s solar manufacturing and export strategy.
Sharp export decline reflects mounting US trade pressure
India’s solar module exports in September fell to about US$80 million, down from around US$134 million in August. This marks the lowest monthly level so far in 2025 and comes after earlier strong growth driven by the US market. The United States, which had accounted for over 90 % of India’s solar module exports earlier this year, introduced heightened import controls and trade-barriers aimed at ensuring that Chinese-made solar cells and modules are not being routed through India. Indian manufacturers now face the dual challenge of tariff risk and market diversion.
Supply-chain and capacity dynamics shift under new export realities
India’s solar-module manufacturing capacity is estimated at ~110 GW and expected to rise to ~165 GW by March 2027. With export flows now under pressure, companies face rising risks of domestic oversupply. Domestic annual installations remain well below the ~44-45 GW necessary to absorb full capacity growth through 2030. As a result, smaller module-only firms may face consolidation, while vertically integrated players (with ingots, wafers, cells and modules) stand a better chance of weathering the downturn. Many exporters are now recalibrating their supply-chains—for example, sourcing cells from third countries to mitigate US origin-rules and tariff exposure.
Impact on Indian manufacturers and export strategy
For exporters whose business model depended on the US market, the tariff squeeze poses both margin and volume risks. Provinces such as Gujarat, which contributed a large share of India’s solar exports (~70 %) are particularly exposed. Manufacturers are already shifting attention to the domestic market and exploring alternate export destinations such as Europe and Latin America—but competition from Chinese players remains intense.
On the domestic side, the slump in export demand places pressure on utilisation rates, capital deployment and working-capital. Firms now face strategic choices: scale back module-only production, invest in upstream cell/wafer capacity, target new geographies or refocus on domestic supply chains that seek to replace imports.
Wider implications for India’s renewable-manufacturing push
India’s ambition to become a major solar-manufacturing hub is challenged by this export setback. While domestic policy supports growth through import duties and manufacturing incentives, an export hiatus limits economies of scale and global competitiveness. If the US export channel remains constrained, India may need to accelerate supply-chain localisation (cells, wafers), identify new export markets, and improve cost-competitiveness against Chinese modules, which remain significantly cheaper.
In addition, the domestic project pipeline—though sizable—may not be sufficient in the near term to absorb surplus manufacturing capacity. Lower export volumes increase the urgency for state and central governments to issue further tenders and scale deployment to maintain demand momentum.
Outlook: export reorientation and strategic recalibration
In the near term, expect Indian manufacturers to reduce reliance on the US market and actively seek alternate geographies, though entry will be difficult given Chinese dominance and rising global panel capacity. Upstream investment in cells, wafers and integrated manufacturing may accelerate as firms respond to export headwinds. On the policy side, Indian authorities may need to enhance export assistance, boost domestic demand programmes and engage in trade-dialogue with the US to mitigate tariff risk.
For the sector to stabilise, two conditions are key: a rebound in alternative export markets or softened US measures, and stronger domestic deployment to match rising manufacturing capacity. Without these, module margins may compress further, consolidation may accelerate, and the “Made in India” solar manufacturing objective may face delay.
Takeaways
- India’s solar-panel exports fell to their lowest monthly level in 2025 (~US$80 million) in September under US tariff pressure.
- The US market, which had represented more than 90 % of exports, is now heavily regulated and scrutiny-intensive.
- Manufacturers face rising domestic oversupply risk as installation demand remains below capacity growth.
- Strategic response will involve supply-chain localisation, export-market diversification and stronger domestic deployment programmes.
FAQs
Q: Why did India’s solar-panel exports fall so sharply?
Because the US imposed higher tariffs and increased scrutiny on Indian module imports over concerns about Chinese-manufactured components being routed via India. These trade-barriers cut Indian access to its major export destination.
Q: Does this mean India’s solar manufacturing industry is in crisis?
Not yet. The industry remains expansionary, but the export setback exposes margin pressure, potential oversupply and strategic risk. Firms that are vertically integrated or pivoting upstream are better positioned.
Q: What can Indian manufacturers do to counter these challenges?
They can diversify export markets beyond the US, invest in upstream manufacturing (cells, wafers), shift focus to domestic demand, improve cost efficiency and engage with policy-mechanisms for export support.
Q: How will this affect India’s renewable energy goals?
If manufacturing growth outpaces demand and export opportunities shrink, then cost pressures may rise and deployment may slow. To meet renewable targets, India will need to align manufacturing capacity with demand and manage global trade risks.
