Author : Antara Ghosal Singh
China’s debate over India’s solar success reflects a deeper anxiety: New Delhi’s growing capacity to absorb industries, capital, and supply chains once anchored in China
In the past few days, the Chinese internet has been abuzz with news of India ‘stealing’ businesses from China, this time in the photovoltaic (PV) space. India’s photovoltaic module production capacity has “skyrocketed” from less than 10 GW in 2018 to 172 GW in 2026 (almost on par with global annual installation capacity), registering a 17-fold increase over eight years. Meanwhile, in China, leading photovoltaic companies have been reporting record-breaking losses totalling tens of billions of yuan since the fourth quarter of 2023, falling into the deepest quagmire of losses in history.
In 2025, 11 of the 15 listed Chinese PV companies reported losses totalling around 50 billion yuan. The five leading companies—TCL Zhonghuan, Jinko Solar, Longi Green Energy, JA Solar, and Trina Solar—reported losses exceeding 28 billion yuan. At this time, news of India’s transformation from a net importer in the 2000s to the “world’s second-largest manufacturer of photovoltaic modules and mobile phones” attracted significant public attention in China, and the contrasting saga (Indian boom, Chinese bust) became a trending topic on Chinese social media. In Chinese public opinion, this dramatic shift in fortunes was directly linked to alleged technology transfer from China, and Chinese companies were criticised bitterly for “aiding the enemy”.
India’s photovoltaic module production capacity has “skyrocketed” from less than 10 GW in 2018 to 172 GW in 2026 (almost on par with global annual installation capacity), registering a 17-fold increase over eight years.
Chinese photovoltaic industry insiders fondly remember those days when the relationship between Chinese and Indian photovoltaic companies was relatively simple: China produced, and India consumed. From 2000 to 2015, China’s cumulative investment in India was only US$ 1.24 billion, accounting for less than 0.5 percent of total global investment in India. For China, India was merely a downstream buyer of Chinese products. However, according to Chinese assessments, things began to change in recent years when India launched its ‘Make in India’ initiative along with supporting measures: i) the Production-Linked Incentive (PLI) scheme, which encouraged companies to set up factories in India; ii) the Basic Customs Duty (BCD) system, which imposed tariffs on imported components, thereby pushing companies to produce locally; and iii) the requirement of Approved List of Models and Manufacturers (ALMM) certification for participation in government projects.
Due to this massive overcapacity, operating rates in the module segment are generally below 60 percent, with many companies losing money on every watt sold and selling prices already falling below production costs.
As a result, it is argued that India’s module production capacity has surged, and along with it, China’s direct exports of photovoltaic modules to India have shrunk dramatically: from 8.2 GW in 2020 to 4.5 GW in 2024, and then to 2.1 GW in 2025. Overall, China’s photovoltaic product exports globally have reportedly declined year-on-year for two consecutive years, falling 13.2% year-on-year to US$24.42 billion from January to October 2025, with Chinese observers attributing this to rising competition from India in third-party markets. Therefore, the Chinese side was furious over the claim that “India has been using Chinese capital, equipment, technology, and engineers to build an industry that essentially challenges China”.
Most Chinese observers argue that Chinese photovoltaic firms continue to sell equipment to India despite the risks, not because of a lack of strategic foresight, but because they have few alternatives. At the heart of Chinese enterprises’ plight is China’s massive overcapacity in this space. For example, in the module segment, China’s capacity is reportedly 1,100 GW+, while global demand is only 600 GW. In the polysilicon production space, China’s capacity is 3.5 million tons, while global demand is only 1.4 million tons, resulting in an oversupply of over 100 percent. In the silicon wafer space, capacity is 850 GW+, while demand is 550–600 GW, with utilisation rates of only 40 percent. Due to this massive overcapacity, operating rates in the module segment are generally below 60 percent, with many companies losing money on every watt sold and selling prices already falling below production costs. Furthermore, silver prices more than doubling in 2025 and polysilicon prices rebounding from their lows in the second half of the year have further widened the gap between costs and prices. The industry seems to be trapped in a vicious cycle of rising revenues but stagnant profits, with module prices falling below the cost line of 0.7 yuan per watt, and some companies entering an era of negative gross margins.
In this cutthroat market, where there is little room to expand domestic production, and manufacturers are facing a precipitous drop in orders, Indian orders are practically a lifeline for these companies. The gross profit margin on complete production lines sold to India is reportedly over 35 percent, far better than selling them at a loss domestically. This survival instinct of individual companies, Chinese observers argue, is leading to a “collective action dilemma” and driving supply chain spillover to India.
Some Chinese observers are hopeful that China can still plug the leak and course-correct on this issue. India, after all, remains a “super assembler”—its polysilicon production capacity is reportedly only about 2 gigawatts, with over 90 percent of demand met through imports. Silicon wafer production capacity is still nascent, while India’s cell production capacity is reportedly 30 gigawatts, covering less than one-sixth of its module production capacity. Import dependence on key photovoltaic equipment, such as crystal-pulling furnaces and PECVD coating machines, still exceeds 85 percent. Moreover, India is heavily reliant on the US market for module exports and remains vulnerable to Trump 2.0 tariff policies. This distorted structure of the Indian industry, they argue, still cannot pose a systemic threat to China in the short term.
In this cutthroat market, where there is little room to expand domestic production, and manufacturers are facing a precipitous drop in orders, Indian orders are practically a lifeline for these companies.
Meanwhile, the Chinese government has already taken a series of measures—such as including equipment used in the production of photovoltaic modules in the catalogue of dual-use items and technologies that can no longer be exported without a licence, and the cancellation of export tax rebates for photovoltaic products starting April 1, 2026—which are expected to check domestic involution to a certain extent and thereby make it difficult for India to obtain the latest production line equipment from China in the future. The Chinese strategic community is also urging Chinese companies to abandon their strategy of “short-term survival over long-term industrial security”, avoid infighting and price wars, and maintain a competitive advantage by moving towards the higher end of the value chain.
More broadly, China is increasingly alarmed by how India has, in recent years, leveraged policy, capital, and geopolitics to cultivate its industries and is gradually demonstrating its ability to absorb entire supply chain shifts from China. The Chinese strategic community is concerned that energy storage and power batteries may be following the same path as photovoltaics. India’s policies, they argue, will make Chinese battery manufacturers very wealthy in the short term, only for the PV episode to be replicated in the energy storage sector in the coming years. Going forward, they caution, Chinese electric vehicles and even semiconductor equipment could face similar risks if adequate measures are not taken. Increasingly convinced that India is seeking to take a leaf out of China’s own playbook—albeit on a tighter timeline—China has recently initiated WTO action against Indian measures on solar cells and modules, as well as IT goods. But, much to China’s unease, its domestic economy remains its Achilles heel, as it has found no easy solution to its structural overcapacity problem amid weak domestic demand, resulting in occasional bloodbaths in key sectors.
Antara Ghosal Singh is a Fellow with the Strategic Studies Programme at Observer Research Foundation.
Antara Ghosal Singh is a Fellow at the Strategic Studies Programme at Observer Research Foundation, New Delhi. Her area of research includes China-India relations, China-India-US …
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