India has set an ambitious renewable energy goal of 500 GW by 2030. With solar power poised to play a central role, the challenge of reducing dependency on imported solar equipment, particularly from China, has become increasingly critical. Despite India’s robust progress, including a record 35 GW of solar and wind capacity additions expected by March 2025, the country remains heavily reliant on Chinese imports, which raises concerns over energy security and economic resilience. India must overcome its dependence on China’s solar industry while maintaining momentum toward its renewable energy targets.
India has made significant strides in scaling up solar capacity, but local solar manufacturing is still nascent. At present, the country depends on imports for nearly 80% of its solar equipment, with China supplying over 60% of these imports. This reliance is largely due to China’s dominance in the global solar supply chain, controlling 97% of polysilicon production and 80% of solar module manufacturing. Other nations, such as Vietnam, Malaysia, and Thailand, also supply India with solar cells and modules, but these countries too rely on Chinese raw materials like polysilicon and wafers.
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India’s solar sector imports reached $7 billion in FY 2024, of which $3.89 billion came from China alone, says a GTRI report. This heavy import dependence not only inflates costs but also exposes India to supply chain disruptions, price fluctuations, and geopolitical risks. Achieving self-sufficiency in solar manufacturing will require tackling these challenges head-on through comprehensive policy support, technological advancements, and strategic collaborations.
Backing local manufacturing
To reduce its reliance on imported components, India needs to bolster its domestic solar manufacturing industry. Currently, most of the country’s solar equipment production is confined to the assembly of imported solar cells and modules, offering minimal local value addition. For instance, 90% of Indian solar manufacturing consists of assembling modules from imported cells, with only 15% of the product’s value being added domestically. To move beyond this stage, India must develop an integrated manufacturing supply chain that spans from silica mining to module assembly.
One critical bottleneck is the production of polysilicon and wafers, the key inputs for solar cells. India currently lacks significant capacity in these upstream production stages. Establishing a domestic polysilicon production industry is not only capital-intensive but also requires cutting-edge technology and massive energy inputs. To overcome this, the government should expand initiatives like the Production Linked Incentive (PLI) Scheme to encourage investments in early-stage solar manufacturing and promote R&D in these critical areas.
Tackling high import costs
India’s annual solar import bill is expected to soar to $30 billion by 2030 if local manufacturing fails to keep pace with the country’s growing solar capacity needs, says the GTRI report. The imposition of a 40% customs duty on solar modules and 25% on solar cells in April 2022 was an important step toward promoting local production. However, these duties apply only to Chinese imports, while components from other countries like Vietnam and Malaysia remain tariff-exempt due to trade agreements.
While import duties help protect domestic manufacturers, they also raise costs for solar project developers, potentially slowing down the adoption of solar energy. Therefore, the government must strike a balance between incentivising local production and keeping solar installations cost-effective. In this regard, targeted subsidies for domestic manufacturers, particularly for upstream production of polysilicon and wafers, could offset some of the higher costs and encourage local capacity building.
Collaborations for self-sufficiency of solar industry
India’s reliance on Chinese imports is not unique. Other major economies, including the US and EU, face similar challenges, as they too depend on Chinese materials for their solar industries. However, these nations are taking steps to diversify supply chains and build domestic production capacity. India should pursue similar collaborations with countries like the US, EU, and Japan to establish a global solar manufacturing ecosystem that is less dependent on China. By pooling resources and expertise, these nations could create large-scale solar cell manufacturing facilities from scratch, enabling them to produce polysilicon, wafers, and modules independently.
Such collaborations could also focus on advancing energy storage technologies, which are essential for integrating large amounts of solar energy into the grid. Battery-linked storage systems are critical for ensuring the stability of renewable energy, particularly solar power, which is subject to daily and seasonal fluctuations. By working together, India and its partners could spur innovation in this field and reduce costs over time.
Strengthening government support
India’s government has already introduced several measures to promote local solar manufacturing. The PLI Scheme, with an initial budget of ₹24,000 crore, supports fully integrated solar PV manufacturing units. The second phase of the scheme, aimed at adding nearly 40 GW of solar PV capacity, is particularly promising. Additionally, the Approved List of Models and Manufacturers (ALMM) requires government-backed projects to use domestically produced solar modules, while programs like the Central Public Sector Undertaking (CPSU) Scheme and PM-KUSUM prioritise locally sourced equipment for solar installations.
However, these initiatives need to be scaled up and complemented by further reforms. For example, simplifying land acquisition processes and fast-tracking environmental clearances for solar projects would reduce project delays and lower costs. Moreover, a clear, long-term policy roadmap for solar energy, with minimal regulatory uncertainty, would provide the confidence investors need to back large-scale manufacturing projects.
Investment in R&D and workforce development
To truly become self-reliant, India must invest heavily in research and development (R&D) for solar technologies. This includes improving the efficiency of solar cells, developing new materials for solar panels, and creating innovative storage solutions. Additionally, India should focus on building a skilled workforce capable of managing advanced solar manufacturing processes and large-scale solar installations.
R&D efforts should also target reducing the environmental impact of solar manufacturing, such as minimising water and energy consumption during polysilicon production and recycling solar panels at the end of their life cycle. By becoming a leader in sustainable solar manufacturing, India can not only reduce its dependency on imports but also position itself as a global hub for green technology.
India’s solar energy industry is at a critical juncture. While the country has made impressive progress in scaling up its solar capacity, its reliance on Chinese imports poses significant challenges to achieving energy security and meeting its renewable energy goals. By enhancing local manufacturing, fostering international collaborations, and providing robust government support, India can overcome these challenges and emerge as a self-sufficient solar powerhouse. The road to energy independence is long and fraught with obstacles, but with the right policies and investments, India can build a resilient and competitive solar industry that contributes to a sustainable future.