India urges caution on lending for new solar module capacity as oversupply looms, ministry letter shows

India’s clean energy ministry has urged banks and other lenders to be cautious in financing new solar photovoltaic module manufacturing capacity, highlighting the potential for oversupply in the local market, a ministry letter reviewed by Reuters showed.

Several Indian companies have expanded solar module capacity over the past three years, targeting exports to the United States.

But higher U.S. tariffs and increased scrutiny by the U.S. on Indian shipments for China-made components have hit exports, raising concerns of oversupply in India, where new solar project installations have slowed due to weak demand.