politics · 2026-06-23
India's Plan to Break China's Solar Grip
India launched new solar manufacturing policy targeting self-reliance in wafers and ingots, where China controls over 80% of global capacity.Without domestic production, India's 500 GW renewable target depends on a single supplier, creating strategic and price vulnerability.Indian solar manufacturers like Adani Green and Tata Power Solar stand to gain, while Chinese exporters face potential market loss.
What specific policy tools did India announce?
India expanded its ALMM (Approved List of Models and Manufacturers) rules to cover upstream components like wafers and ingots, not just finished panels. The policy mandates domestic sourcing for govt-backed solar projects. For example, Adani Green's 20 GW pipeline would need to use Indian-made components to qualify for subsidies.
How does ALMM actually restrict imports?
ALMM is a whitelist. Only panels from listed manufacturers can be used in govt-subsidized projects. Projects using unlisted Chinese panels lose access to viability gap funding. For example, a 100 MW tender by NTPC would require panels from ALMM-approved Indian factories, effectively blocking cheaper Chinese alternatives.
Why target wafers and ingots specifically?
Wafers and ingots sit at the top of the solar value chain. A single wafer accounts for ~40% of a cell's cost. China's dominance here means even Indian panel assemblers depend on Chinese upstream inputs. Controlling wafer production breaks that bottleneck. India currently has near-zero domestic wafer capacity.
Are subsidies attached to this policy shift?
Yes. India's PLI (Production Linked Incentive) scheme allocates ~₹19,500 Cr for solar manufacturing. Firms like Reliance New Energy received PLI approval for integrated facilities. The incentive structure rewards backward integration, meaning companies cannot simply import cells and claim incentives for last-stage assembly.
Could India's solar sector survive without this?
India installs ~15 GW of solar annually, but imports ~80% of cells and modules from China. A supply disruption, like China's 2024 export controls on gallium, could stall projects for months. Without local wafer capacity, India's 500 GW by 2030 target faces a single point of failure.
What happens if Chinese panels get cheaper still?
India imposed a 40% basic customs duty on imported modules and 25% on cells in 2022. Even if Chinese panels drop further, the duty plus ALMM restriction makes them uncompetitive in govt tenders. However, rooftop and private commercial projects, which are not ALMM-bound, may still prefer cheaper Chinese panels.
How long until India can match China's scale?
China spent two decades and over $50 Bn in subsidies building its solar supply chain. India's current module capacity is ~40 GW, but wafer capacity is under 5 GW. Analysts estimate India needs 5 to 7 years to reach 30 GW of integrated capacity. Adani's Mundra plant, India's largest, took 3 years to build.
Could this raise solar power tariffs short term?
Yes, short-term tariff increases are likely. Indian-made panels cost ~10 to 15% more than Chinese equivalents. NTPC's recent bids saw solar tariffs inch up from ₹2.5 to ₹2.8 per kWh after ALMM enforcement. Over time, scale economies should narrow the gap. India's PLI subsidies aim to offset this cost premium during the transition.
Which Indian firms are best positioned here?
Adani Green, Tata Power Solar, and Vikram Solar are expanding domestic cell and module lines. Adani's 10 GW integrated facility in Mundra covers ingots to modules. Chinese firms like LONGi and JA Solar, which supply ~60% of India's panel imports, face shrinking access to India's fast-growing market.
Who beyond manufacturers feels the impact?
Solar project developers like ReNew Power face higher input costs and longer procurement timelines. EPC contractors must requalify supply chains. Indian polysilicon producers, a nascent segment, gain a captive market. Consumers may see marginally higher electricity tariffs in states with heavy solar procurement like Rajasthan and Gujarat.
Do state govts support or resist this policy?
States with large solar targets, like Rajasthan and Gujarat, broadly support it because local manufacturing creates jobs. However, states prioritizing cheap power, like Andhra Pradesh, have pushed back on ALMM compliance timelines. The Centre offered a 6-month transition window, but 3 out of 10 major solar states requested extensions.
How does this affect India's climate targets?
India's 500 GW renewable target by 2030 requires ~30 GW annual solar additions. Short-term, costlier domestic panels may slow installations by 10 to 15%. Long-term, supply chain security actually de-risks the target. For context, India added only 15 GW in 2025, partly because Chinese module shipments faced customs delays.
Source: ndtv.com