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India’s Solar Evolution: From Imports to a Thriving Domestic Industry

India’s solar journey has witnessed a remarkable transformation over the past decade. The first phase of solar expansion (2013-2020) was primarily driven by imported solar hardware, predominantly from China. This reliance on cost-effective Chinese modules enabled India to scale up its solar photovoltaic (PV) installations at a rapid pace.

The Import-Driven Growth Phase (2013-2020)

• Indian project developers benefited from China’s economies of scale and favorable manufacturing conditions, including lower land, capital, and energy costs.
• The continuous decline in solar hardware prices and India's competitive bidding process ensured that cost reductions were directly passed on to consumers through record-low solar tariffs.
• This period firmly established solar energy as a viable and competitive clean energy source. Innovations like Firm and Dispatchable Renewable Energy (FDRE), which combines solar with other sources to ensure round-the-clock power, further strengthened its credibility.

Policy Shift and Rise of Domestic Manufacturing (Post-2020)

• In mid-2020, India revised its solar strategy, reducing its reliance on Chinese imports amid geopolitical tensions. While the Make in India initiative had been announced earlier, it initially did not cover solar hardware.
• A major policy shift came with the Production Linked Incentive (PLI) scheme, launched across 14 sectors, including high-efficiency solar panels and advanced cell chemistry batteries. This industrial strategy aimed to transition India from polycrystalline to monocrystalline technology and enhance domestic solar manufacturing.

A Rapid Industry Response

• In just three years (2021-2024), 97 Indian companies have entered the solar module and cell manufacturing sector.
• While many manufacturers still rely on imported solar cells from China due to domestic supply constraints, the industry has taken major strides.
• Despite customs duties, solar imports from China remain competitive, and India has even exported $2 billion worth of solar panels, positioning itself as a viable China Plus One supplier.

Towards a Fully Integrated Solar Supply Chain

• Leading Indian manufacturers are now moving towards backward integration, with some beginning wafer production.
• The next steps—ingot and silicon manufacturing—are capital-intensive and currently depend on Chinese machinery. However, progress in these areas will be crucial for India's long-term solar self-reliance.
• India’s ability to scale up solar installations was significantly aided by seven years of affordable and high-quality Chinese module imports. Had the country relied solely on domestic panel manufacturing from the outset, its installed solar capacity—currently at 89.4 GW—would likely have been much lower.

As India continues to expand its solar industry, balancing domestic manufacturing growth with cost competitiveness and supply chain security will remain key to achieving its renewable energy ambitions.