India's Solar Energy Fueled Renewable Goals to Boost Chinese Dependency

India's ambitious target of installing 500 GW of renewable energy by 2030, largely driven by solar power, could significantly increase the country's dependence on imports, particularly from China, according to a report by the Global Trade Research Initiative (GTRI). The report projects that solar equipment imports may reach USD 30 billion annually unless India strengthens its domestic solar manufacturing industry.

India installed 15 GW of solar capacity in 2023-24, bringing the total to 90.8 GW by September 2024, a significant increase from 2.8 GW in 2014. However, to meet its 2030 renewable energy target, India will need to accelerate the pace of solar installations to 65-70 GW per year. Over 80% of the renewable energy target is expected to come from solar power.

Despite initiatives like the production-linked incentive (PLI) scheme, India's solar manufacturing sector is still in its nascent stage, with most projects dependent on imported solar modules, particularly from China. In 2023-24, India imported USD 7 billion worth of solar equipment, with 62.6% of this coming from China. China also dominates the global solar supply chain, controlling 97% of polysilicon production and 80% of solar module manufacturing, which makes it difficult for India or other countries to compete due to China's lower prices.

Ajay Srivastava, founder of GTRI, highlighted that while the PLI scheme is designed to boost local manufacturing, its impact has been limited as it still relies on imported inputs. Developing a self-reliant solar manufacturing industry in India will require significant investments, particularly in polysilicon and wafer production, to create an integrated supply chain and reduce dependency on imports. Without such measures, India may face challenges in meeting its renewable energy goals and will continue to grapple with high import costs.