India‘s Solar Sector: A Shift Towards Domestic Production and Enterprising Growth
India’s solar energy market is experiencing a significant change, driven by a combination of government policies, decreasing costs, and a growing domestic demand. Once heavily reliant on exports, companies like Vega Solar are now finding a burgeoning customer base within India itself. Prior to the COVID-19 pandemic, Vega Solar derived 90% of its revenue from international sales, a figure that has now reversed, with domestic demand dominating their business.
This shift coincides with a broader national push towards clean energy.India, historically a major carbon emitter, is aggressively investing in solar and other renewable sources. The economic viability of solar power – now cheaper than building new coal-fired plants – coupled with the country’s abundant sunshine, has fueled a thirty-fold increase in installed solar capacity over the last decade.
While India has traditionally imported a significant portion of its solar components,particularly from china,this reliance is beginning to diminish. Recent data reveals a more than one-third decrease in solar cell and module imports from China during the first quarter of the year, totaling $1.3 billion. This reduction is a direct result of proactive government policies designed to stimulate domestic manufacturing. These policies include restrictions on imports, financial incentives for indian manufacturers, and mandates requiring solar power producers to source materials from approved domestic suppliers.
The impact of recently announced U.S. tariffs on solar imports remains uncertain, with experts suggesting the effects won’t be fully realized for at least a year due to pre-existing order books.However, the overall trajectory for Indian solar manufacturing remains positive. Capacity for solar module production has more than doubled, reaching 74 gigawatts, while solar cell manufacturing has tripled to 25 gigawatts in the fiscal year ending March 2025.
Despite this progress, India still depends on China for raw materials like polysilicon, due to a lack of domestic mining and processing infrastructure. However, government initiatives are underway to address this dependency by fostering the development of critical mineral production capabilities. Industry analysts predict that by 2030, India could potentially reduce its import needs to solely polysilicon, manufacturing the remaining components domestically.
“the next few years will be critical in determining how far we can go,” notes Shubhang Parekh of the National Solar Energy Federation of India, acknowledging the ongoing challenges in establishing robust supply chains for raw material processing.
With nearly 170 gigawatts of renewable energy projects already in the pipeline, and an ambitious target of 500 gigawatts of clean energy capacity by 2030, India’s solar sector is poised for continued growth, fueled by policy support and a burgeoning domestic manufacturing base.Sanjay Verghese, Group President for Solar Manufacturing and Solar Projects at ReNew, emphasizes the importance of continued policy support, stating, “We are in a good phase right now…we expect that momentum to be maintained.”