India's solar industry is aggressively expanding its manufacturing capabilities to compete with China, fueled by government support and increasing domestic demand. This ambition is taking shape even as the industry grapples with challenges such as U.S. tariffs and reliance on Chinese materials.
Expansion of Manufacturing Capacity
India's solar module manufacturing capacity nearly doubled in the fiscal year ending March 2025, reaching 74 gigawatts (GW) from 38 GW in March 2024. Solar cell manufacturing witnessed even more impressive growth, tripling from 9 GW to 25 GW during the same period. Projections indicate that module production capacity could reach 160 GW by 2030, with cell manufacturing capacity soaring to 120 GW. To achieve this, India aims to add about 200 GW of solar capacity over the next five years. In January 2025, the country's installed solar capacity crossed 100 GW.
Several factors are driving this expansion. Government policies restricting imports of solar components, incentives for solar manufacturers, and mandates for solar power producers to purchase material from government-approved sources have provided the right signals to Indian companies to ramp up manufacturing. Investments worth INR 41,000 crore have been made under the Production Linked Incentive (PLI) Scheme for High-Efficiency Solar PV Modules, generating direct employment for around 11,650 people.
Challenges and Opportunities
Despite this impressive growth, India's solar industry faces significant hurdles. One major challenge is the dependence on China for raw materials. Although India is making progress in reducing this reliance, it still needs to import these materials due to a lack of domestic infrastructure for mining and processing them. Government initiatives to produce critical minerals are slowly addressing this issue.
Another challenge comes from the United States. The U.S., previously India's largest buyer of solar panels, has imposed tariffs on Indian goods, making those exports financially unviable. Specifically, the Trump administration's 50% tariff on Indian imports has sharply reduced the U.S. market for Indian solar panels, threatening the growth of India's expanding clean energy manufacturing sector. This situation is worsened by the fact that domestic project bidding in India is slowing down, potentially leading to a solar panel supply glut.
Despite these challenges, the U.S. tariffs could also present opportunities for the Indian solar industry. By reducing reliance on Chinese imports and increasing domestic manufacturing, India can potentially gain a competitive edge in the global market.
Government Initiatives and Targets
The Indian government is committed to supporting the growth of the solar industry. It has set an ambitious clean energy target of 500 GW by 2030. To achieve this, the government is implementing policies to promote domestic manufacturing, such as import duties on solar modules and cells, and mandates for using domestically produced components.
The Path Ahead
The Indian solar energy market is expected to reach 284.14 GW by 2033, with a CAGR of 13.35% from 2025 to 2033. This growth will be driven by government initiatives, declining solar technology costs, rising energy demand, growing environmental consciousness, and technological breakthroughs.
India has nearly 170 GW of renewable energy projects in the pipeline, most of which are solar, expected to be completed in the next few years. The country's increasing energy demand, driven by rapid industrialization and urbanization, is fueling the solar power manufacturing boom. India's solar module manufacturing capacity is set to increase from 80 GW in 2025 to 160 GW by 2030.
To fully realize its potential, India needs to address its dependence on Chinese imports for raw materials and components. It also needs to find ways to mitigate the impact of U.S. tariffs on its solar exports. By focusing on these key areas, India can strengthen its solar industry and emerge as a major player in the global clean energy market.
