India Is Set to Become the World’s Second Largest Solar Market in 2026
The Numbers That Changed This Week
On April 12, 2026, the National Solar Energy Federation of India (NSEFI) announced that India is on course to become the world's second largest solar market this year in terms of annual installations. This is a significant jump. In 2025, India was the third largest. By the end of 2026, it is expected to overtake both the United States and the European Union in annual additions.
The reason is simple: India's pace has accelerated dramatically while other major markets are slowing down. The US is dealing with policy uncertainty after changes to federal clean energy incentives. European markets are maturing. India, by contrast, is in the middle of its fastest deployment phase ever.
What Got Us Here
The jump from 100 GW to 150 GW in 14 months was driven by a combination of forces working together for the first time. Utility scale ground mounted projects saw 106% growth compared to FY2025, adding around 34.8 GW. Rooftop solar, pushed by PM Surya Ghar, saw a sharp rise in household demand. Additionally, commercial and industrial (C&I) solar crossed the 10 GW mark for the first time, driven by the Green Energy Open Access framework and growing corporate demand for clean power.
On the manufacturing side, India's module production capacity reached 172 GW in FY2026. Domestic cell manufacturing is still growing — but ALMM List II compliance from June 1 will accelerate the shift to Indian cells. The PLI scheme, ALMM, and the Basic Customs Duty on imported panels have combined to build a domestic supply chain that did not exist five years ago.
What This Means for EPCs Right Now
For Indian solar EPCs, the market expanding to this scale is positive in one important way: there is more work available than at any point in history. Government tenders are being issued steadily. PM Surya Ghar applications continue to flow. C&I demand is rising as companies face Renewable Consumption Obligations. And PM KUSUM 2.0 is expected to unlock another large wave of agricultural solar.
The challenge is on the supply side. ALMM compliance from June 1 will tighten the pool of available modules for government and subsidy projects. Copper costs remain elevated. Project timelines are under pressure because DISCOM approvals have not scaled as fast as the market. EPCs who are prepared — with compliant supply chains locked and efficient project workflows in place — are in a strong position. Those who are not will face delays and cost overruns as the June deadline approaches.
The Next Three Years
NSEFI projects India will need 280 to 300 GW of solar to hit its 500 GW non fossil target by 2030. From 150 GW today, that means adding roughly 130 to 150 GW in the next four years — or about 35 to 40 GW per year. At the pace India set in FY2026, this is achievable. For EPCs, this pipeline is enormous. Residential rooftop alone, with PM Surya Ghar targeting 1 crore more households, represents millions of installations. The C&I segment is just starting. And energy storage, which NSEFI forecasts will hit double digits in capacity within 18 months, will create an entirely new project type for EPCs to work on.
Frequently Asked Questions
Common questions about India's solar growth and what it means for EPCs.
Which country is now the world's largest solar market?
China remains the world's largest solar market by a significant margin — both in total installed capacity and annual additions. India is set to become the second largest in 2026 by annual installations, overtaking the US and EU. In total installed capacity, India is now third globally after China and the US.
How does the 150 GW milestone affect solar prices in India?
The milestone itself does not directly change prices. But the volume growth has had two opposing effects: more domestic manufacturing capacity has kept module prices from rising as much as they could have, but the ALMM compliance requirement, copper prices, and the removal of China's VAT rebate have all pushed costs upward. The net result is that 2026 project costs are approximately 20 to 25% higher than 2025 levels despite the scale of the market. The GST cut to 5% from September 2025 partially offsets this.
What is PM KUSUM 2.0 and when is it expected?
PM KUSUM 2.0 is the next phase of the agricultural solar scheme, which solarises irrigation pumps for farmers and supports small decentralised solar plants on agricultural land. The original PM KUSUM scheme ran through March 2026. PM KUSUM 2.0 has been referenced by NSEFI and MNRE as an upcoming programme but has not yet been formally notified with full details as of April 16, 2026.
EPCs should watch for MNRE notifications in the coming months for detailed guidelines and capacity targets.
Sources
- NSEFI via Saur Energy — saurenergy.com — "In 2026, India To Be Second Largest Solar Market Globally" (April 12, 2026)
- JMK Research — jmkresearch.com — FY2026 solar capacity data: 44.6 GW solar added, 87% growth, 6 GW wind
- IndexBox — indexbox.io — India FY2026 renewable boom: 275 GW total, 55% solar share (April 2026)
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