The government deserves credit for fostering the solar industry’s growth. A major milestone came in 2017, when the cost of solar energy per unit fell below that of coal energy — achieving “grid parity.

Current Status of India’s Solar Industry

• Grid parity benefit: The achievement of grid parity encouraged private investment driven by profitability rather than only climate commitments.
• Global Rank:  India is now the third-largest solar power producer in the world, after China and the United States, having overtaken Japan.
• Manufacturing Growth:  India’s solar module manufacturing capacity has expanded dramatically — from just 2 GW in 2014 to about 100 GW in 2025.
• PLI Scheme: The Production Linked Incentive (PLI) Scheme played a crucial role by promoting true domestic manufacturing, not just assembly of imported parts like polysilicon and solar cells from China. 
  • Incentives were tied to production output, driving investment in the full value chain.

Challenges of India’s Solar Industry

• Panchamrit Target Gap: At COP26 (Glasgow), India pledged that 50% of its power would come from non-fossil sources by 2030, requiring 500 GW of renewable capacity, including 280 GW from solar.
  • Current installed solar capacity is about 117 GW, leaving a gap of 163 GW to be added in the next 5–6 years.
  • This demands an annual addition of 30 GW, but India is currently adding only 17–23 GW per year.
• Demand–Supply Mismatch: Although India has 85 GW of manufacturing capacity, domestic demand for solar modules is only 17–23 GW. 
  • This underutilization threatens factory shutdowns, rising NPAs, and slow capacity expansion.
• Export Challenges: Indian solar panels are 1.5–2 times more expensive than Chinese ones, making exports difficult.
• China’s Edge: China dominates due to:
  • Massive economies of scale
  • Control over critical raw materials (like polysilicon and wafers)
  • Superior automation and advanced technology
  • In 2024, China exported 236 GW of solar panels, compared to India’s 4 GW — most of India’s exports benefiting only from U.S. tariffs on Chinese imports.

Way Forward

• Africa Potential: Africa, blessed with abundant sunlight, remains vastly underdeveloped in solar energy. 
  • Since China focuses mainly on affluent markets like the U.S. and Europe, Africa presents an opportunity for India to fill the gap.
  • Only 4% of Africa’s high-potential agricultural land is irrigated, hindered by costly electricity and weak water networks. 
  • Solar energy can drive both agricultural and rural development.
• Leveraging Exportable Indian Models: India can help African nations replicate its successful solar programs:
  • PM KUSUM Scheme: Offers subsidized solar pumps to farmers, with government purchase of surplus power.
  • PM Surya Ghar Yojana: Encourages rooftop solar installations to cut household electricity bills.
• Role of International Solar Alliance (ISA): Through the ISA, India can extend concessional loans to African countries on the condition that they procure solar panels from India, expanding both solar access and Indian exports.
• Pragmatic Strategy: Since China is already dominant in Africa, India should aim to become the second-largest solar supplier, offering an alternative for countries seeking to diversify away from Chinese dependence.

Conclusion

India’s solar progress is commendable, but tapping African markets is vital to sustain growth and challenge China’s dominance.

DOWNLOAD PDF