The pace of solar power installations in India has been remarkably swift over the last decade. With the growth of such capacity creation in the United States and the European Union slumping after several years of double-digit expansion, India is set to become the world’s second largest solar market by annual installations after China.
That sounds reassuring. And a sharp 70% fall in solar module imports by value in FY26 signals creditable progress in indigenisation. To be sure, the policy thrust on renewable energy (RE), with the solar segment as its core, is chiefly aimed at cutting India’s massive fossil fuel imports.
It is also central to the effort to de-carbonise economic growth and meet the goal of net-zero carbon emission by 2070.
But the country’s solar story is marred by a “large upstream gap” that still needs bridging. A heavy dependence on Chinese cells, wafers, polysilicon, inverters and other production equipment persists. This is despite efforts to diversify the sourcing of these items to countries like Indonesia, Ethiopia, Thailand and Vietnam.
Analysts say that the sooner these items could be indigenously manufactured at competitive rates, the more fruitful India’s RE policy would be. “India’s dependence on China in the solar sector remains high, but it has shifted from finished modules to the upstream value chain,” Alekhya Datta, director, electricity and renewables division at The Energy and Resources Institute (TERI), said.
Commerce ministry data showed combined imports of solar cells and modules rose 11.8% to Rs 35,968.92 crore in FY26 from Rs 32,168.72 crore in FY25. The increase came entirely from cells: imports jumped 95% to Rs 27,133.68 crore from Rs 13,905.37 crore. At the same time, module imports fell 51.6% to Rs 8,835.24 crore from Rs 18,263.35 crore.
The country imported 8.01 billion solar cells in FY26, up 58% from 5.06 billion in FY25. Policy favours localised module assembly, but factories still need imported cells and upstream inputs.
India crossed 150 GW of installed solar capacity after commissioning 44.6 GW in FY26. Its module-manufacturing base has expanded from 8.2 GW in 2021 to around 210 GW, while capacity under the Approved List of Models and Manufacturers (ALMM), a policy tool for fast-tracking localisation, rose from 67.3 GW in February 2025 to 193.9 GW by May 2026.
The Rs 24,000-crore production-linked incentive scheme, basic customs duty and ALMM rules have driven the build-out. In dollar terms, module imports fell 53.77% to $994.66 million in FY26 from $2.15 billion in FY25. Module exports slipped 6.19% to $1.05 billion.
Cells remain the immediate bottleneck. Installed capacity has increased from less than 5 GW to 27-30 GW, but effective operational capacity is closer to 20 GW because several lines are stabilising, according to Ankit Jain, vice-president and co-group head, corporate ratings, Icra. New lines typically need six to eight months to achieve utility-scale consistency.
Crisil Ratings expects domestic cells to meet around half of the projected 60-65 GW requirement this fiscal, up from about one-fourth last year. “Domestic supply will gain share and meet around half of the demand, with imports making up for the rest,” said Manish Gupta, deputy chief ratings officer at Crisil Ratings.
Manufacturers are investing more than Rs 35,000 crore to lift cell capacity beyond 70 GW by March 2027 and 100 GW by December 2027. Yet module capacity already far exceeds annual installations, risking weak utilisation.
The vulnerability deepens at the wafer stage. Imports of undiffused silicon wafers more than doubled between FY25 and FY26, with China supplying over 99% of India’s requirement. China accounted for 93.2% of global polysilicon output, 97% of wafers, 90% of cells and 86.5% of modules in 2024, besides over 80% of global inverters.
Anujesh Dwivedi, partner at Deloitte India, said wafer and ingot manufacturing is more capital-intensive and will need targeted support. The government has signalled ALMM List III for wafers by 2028 after List II sought to promote approved Indian cells.
There are early signs of diversifying upstream solar sourcing. Indonesia supplied cells worth Rs 2,186 crore in FY26, Ethiopia emerged as a new source with Rs 1,396 crore, and Thailand and Vietnam gained share. Yet these suppliers often remain dependent on Chinese wafers, machinery and materials.
“True supply-chain resilience will come only through greater backward integration and a more diversified sourcing ecosystem,” said Siddharth Bhatia, managing director and CEO of Oyster Renewables. He said incentives must be matched by investment in advanced cells, equipment, material science and research.
Cost and technology remain formidable barriers. Chinese manufacturing costs are estimated to be 10% below India’s, 20% below the US’ and 35% below Europe’s. Global module spot prices fell below $0.10 per watt in 2024, while Indian prices in early 2025 were around Rs 15.39 per watt, or roughly $0.18.
Indian manufacturers spend up to 0.1% of revenue on R&D, against 2-6% by leading Chinese companies. Public investment in solar-PV research in India since 2014 is estimated at $13 million, even as technology shifts from PERC to TOPCon, heterojunction, back-contact and tandem-perovskite cells.
Vinay Rustagi, chief business officer at Premier Energies, said India had achieved module self-sufficiency but still had “lots more work” to do in domestic technology and upstream manufacturing. Vinay Thadani, director and CEO of GREW Solar, said the expansion demonstrated growing industrial capability, but innovation and policy continuity would determine whether India closes the remaining gaps.
India has diversified crude oil and LNG supplies to reduce geopolitical risk. Solar is a tougher test because its manufacturing chain is far more concentrated. Unless the country builds competitive capability in cells, wafers, ingots, polysilicon, machinery and research — while widening import sources — it risks cutting dependence on imported fuels only to remain exposed to another concentrated energy supply chain.
A new Metro route connecting Kalyani Nagar to Pune International Airport has been finalised, allowing passengers to skip the last-mile taxi or auto ride. Union Minister Murlidhar Mohol announced the development after a review meeting with officials. The project will improve connectivity between the airport and different parts of Pune and Pimpri Chinchwad.
