India’s solar success is riding high, but remains wired to the Dragon

India’s remarkable progress in its clean energy transition — evidenced by achieving 50 per cent of its installed electricity capacity from non-fossil fuel sources five years ahead of its 2030 target under the Paris Agreement — is a milestone. This accelerated momentum positions the nation to pursue its ambitious goal of 500 gigawatts (GW) of non-fossil capacity by 2030, largely driven by the rapid expansion of solar energy.

However, this impressive growth trajectory is intertwined with a critical global dynamic: China’s pervasive dominance across the renewable energy supply chain. Chinese companies control 75 per cent or more of global manufacturing capacity in every solar PV supply chain segment — a share forecast to grow to between 80 per cent and 95 per cent. 

For instance, China produced approximately 91 per cent of the world’s polysilicon and over 97 per cent of ingots and wafers in 2023-2024 and controls 80 per cent of solar cell and 83 per cent of solar module production. Albeit contentious, this hegemonic supply chain has notably driven down global solar module costs.

For India, these numbers translate into a substantial — though decreasing — reliance. India depends on imports for nearly 80 per cent of its solar equipment, with China supplying over 60 per cent of these imports. In the 2024 financial year, solar sector imports reached $7 billion, with $3.89 billion originating from China alone.

While India also sources from Southeast Asian partners such as Vietnam and Malaysia, these countries often rely on Chinese raw materials like polysilicon and wafers, reinforcing the underlying dependency. Recent data indicates a positive trend, with China’s share in India’s solar cell imports decreasing from over 90 per cent in financial year 2022 to 56 per cent in 2024; for modules, the share fell to 65 per cent in 2024. 

Despite this progress, India remains dependent on China for over 50 per cent of its PV cell and module components, particularly upstream materials such as polysilicon and wafers.

A key aspect of China’s clean-energy engagement in the Indian context is its primary focus on direct exports of clean-energy equipment, rather than significant co-manufacturing or direct technology transfer within India. While climate policy website Carbon Brief’s analysis shows China’s clean-energy footprint extending globally through exports, overseas manufacturing plants and project finance investments, in India the influence remains predominantly import-centric. 

This contrasts with China’s involvement in countries like Saudi Arabia, the UK and ASEAN counterparts such as Malaysia, Thailand, Indonesia and Vietnam, where there are Chinese manufacturing plants or involvement in manufacturing projects.

Even Indian companies that have received government incentives — such as those under the Production Linked Incentive (PLI) scheme — still heavily rely on Chinese equipment suppliers, with one Indian solar company listing all seventeen of its supply chain partners as Chinese firms.

This heavy reliance on imported components disadvantages India’s indigenous supply chain, as domestic manufacturing — especially for energy- and capital-intensive upstream components like polysilicon and wafers — remains nascent or non-existent. India’s strategy under the National Solar Mission initially prioritised increasing installed capacity and attracting lower energy tariffs, which inadvertently incentivised reliance on cheaper foreign imports over supporting domestic manufacturing.

India’s higher energy costs and lower labour productivity also contribute to making solar module manufacturing more expensive in the country than in China. Government efforts to support manufacturers — such as the Domestic Content Requirement and safeguard duties — have faced challenges, including World Trade Organization disputes and practical implementation issues, leading to inconsistent support. 

In 2018, senior government officials admitted that Indian manufacturers largely used “obsolete technology” and had the capacity to produce only 3 GW of solar cells and 9-10 GW of solar panels, far below the country’s needs.

To build a truly resilient and secure energy future, India’s strategic approach must not be to sever ties with China entirely, but rather to diversify its national supply chains and actively pursue a range of international options. This aims to reduce vulnerabilities and foster domestic capabilities while still leveraging global market efficiencies where beneficial.

Strategies for diversification

These strategies are key for India to diversify its supply chains.

• Strengthening domestic manufacturing across the value chain: While India has existing production capabilities for solar cells and modules and is projected to become the largest module producer outside China by 2025, it critically lacks significant capacity in upstream segments like polysilicon, ingots and wafers. India needs to develop an integrated manufacturing supply chain — from silica mining to module assembly — to achieve true self-reliance.

• Robust policy support and investment: Initiatives like the PLI scheme are crucial, aiming to expand India’s solar PV cell and module manufacturing capacity to over 70 GW and close nearly 80 per cent of the investment cost gap with Chinese manufacturers. The Approved List of Models and Manufacturers, which requires government-assisted projects to source India-made modules, is another vital step that has been reimposed. These efforts require consistent, long-term planning and sufficient funding, especially for capital-intensive upstream production.

• Diversified international cooperation and research and development: India should actively seek collaborations with a variety of partners, such as the United States, European Union and Japan. These partnerships can offer concessional financing, advanced technologies (for example, green hydrogen, offshore wind) and expertise — moving beyond simple reliance on a single source.
  For instance, the US Development Finance Corporation has already lent nearly $1 billion for solar cell and module production in India. However, India-US relations are currently going through a rough patch, driven by diplomatic tensions and public anger in India over US efforts to mediate and its perceived linking of trade with the Kashmir issue.
  As a result, progress on this front is being held back by Washington’s foreign policy towards India and Trump’s generic ignorance of climate action. Herein, significant investment in domestic research and development is also vital for technological self-reliance and global competitiveness.

• Strategic Balancing in the Geopolitical Landscape: India’s non-aligned foreign policy can be leveraged to strategically engage with both the US and China — balancing affordability with innovation to serve its national interests without succumbing to external pressures. This approach allows India to capitalise on the competitive aspects of US-China climate policies to negotiate mutually beneficial terms.

India’s renewable energy journey is moving fast, but to be sustainable, it must reduce its dependence on China. While procuring readily available, cost-effective components from a dominant supplier provides a quick start, the focus should now shift to diversifying supply options. This does not mean cutting ties with China completely, but rather building strong domestic capacity, working with diverse global partners and investing in innovation at home.

A more balanced and self-reliant approach will help India meet its climate goals while protecting its economic and strategic interests.

Upamanyu Dutta is a postgraduate student in Environmental Policy at Sciences Po, with a focus on the multilateralism and political economy of climate change.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth