By Zarak Khan | 2026-07-17

India has emerged as one of the world's lowest-cost major solar power markets, giving New Delhi an economic advantage as it intensifies efforts to weaken Beijing's dominance of the global solar supply chain.

Backed by government subsidies, import restrictions and incentives for domestic manufacturing, India is trying to transform itself from one of the world's largest solar equipment importers into a manufacturing hub. The strategy aims to position the country to compete with China in both domestic and international markets.

While Beijing remains the overwhelming leader in the production of polysilicon, solar wafers, cells and modules, New Delhi is increasingly presenting itself as a trusted alternative for investors seeking to diversify supply chains away from Beijing amid rising geopolitical tensions.

India's levelized cost of electricity for utility-scale solar projects stood at $35/MWh in 2025, narrowly beating China's $36/MWh and sitting significantly below the global average of $44, according to a report released in July by the International Renewable Energy Agency, an intergovernmental organization.

India added a national-record 37.9GW of solar capacity in 2025, one of the highest rates of growth globally, according to an April report by Ember Energy, a UK-based think-tank.

Decoupling from China

India's solar manufacturing drive represents one of its most ambitious attempts yet to reduce reliance on China's industrial ecosystem.

Since 2014, Chinese companies have spread rapidly across India's technology sector, manufacturing industry and digital economy, prompting "worries in New Delhi about strategic exposure and concentrated foreign ownership," according to a June 26 report by South Asia Voices, an online policy platform hosted by the Stimson Center think-tank.

Those concerns intensified dramatically following the deadly 2020 Galwan Valley clashes, in which at least 20 Indian and four Chinese soldiers were killed, the first combat fatalities along the disputed border in 45 years.

After the combat, India turned a precautionary mechanism for screening investments into a broader economic policy, the report said.

New Delhi's latest move extends the Approved List of Models and Manufacturers (ALMM) framework beyond solar modules and cells to include upstream products such as solar ingots and wafers.

The new mandate, set to take effect on June 1, 2028, requires all solar projects to use domestically produced wafers, NDTV reported June 23.

Industry executives describe the policy as India's boldest attempt yet to gain mastery over one of the solar industry's most strategically important manufacturing stages.

"The ALMM 3 policy is designed to break China's complete monopoly on the global ingot-wafer industry and improve India's energy security," said Vinay Rustagi, chief business officer at Premier Energies.

The policy could incentivize investments of approximately 500 billion INR ($5.2 billion) over the next three years, creating almost 80GW of domestic wafer and ingot manufacturing capacity, Rustagi said.

China challenge

India still faces significant obstacles before it can challenge China's industrial leadership.

Many Indian factories still rely heavily on Chinese equipment and technical expertise.

Several manufacturers that received government support under India's Production Linked Incentive scheme struggled to commission sophisticated production equipment because only Chinese engineers possessed the necessary expertise on installing and calibrating advanced ingot-growing furnaces.

Nevertheless, government incentives appear to be rapidly reshaping India's manufacturing landscape.

Sanjay Varghese, a senior executive at Indian renewable energy company ReNew, credited the government's "Make in India" strategy, which combines tariffs, non-tariff barriers, ALMM regulations and roughly $2.5 billion in Production Linked Incentive support, with transforming the sector within five years.

"Five years ago, all solar modules being installed in India were being imported from China," Varghese told Germany's Deutsche Welle July 7. "But today, all modules, and about 50% of the cells being consumed in India, are made in India."

India's industrial strategy has intensified trade tensions with Beijing.

In June, the World Trade Organization established a dispute settlement panel following China's request to "review measures in India affecting imports of solar cells, solar modules and information technology goods."

India's domestic content requirements and tariffs discriminate against foreign manufacturers, says Beijing.

Diversified supply chains have become essential, says New Delhi, which cites how repeated disruptions exposed the risks of dependence on a single supplier.

Global partnerships

Recognizing that China remains too dominant to challenge alone, India has increasingly aligned itself with Western-led initiatives designed to diversify critical technology supply chains, including the International Solar Alliance (ISA), which it jointly launched with France in 2015.

Headquartered in Gurugram, India, the ISA now counts more than 125 member and signatory countries. It reinforces New Delhi's image as a global clean energy leader independent of Chinese influence.