The Geopolitics of Solar Manufacturing: How is India Building an Alternative Supply Chain to China?

Event Overview

In July 2026, India's solar manufacturing industry reached another milestone: module annual capacity exceeded 200 GW, ALMM-certified capacity surpassed 190 GW, and cell capacity broke through 30 GW. However, upstream polysilicon is almost entirely imported, and over 95% of wafers come from China. This structural imbalance highlights India's vulnerability in the photovoltaic supply chain and reflects the deepening geopolitical game in the global solar manufacturing industry.

Supply Chain Background

The solar manufacturing supply chain includes polysilicon, ingots, wafers, cells, modules, and auxiliary materials. Over the past two decades, China has controlled more than 80% of global manufacturing capacity and 95% of wafer capacity through systematic investment. This high concentration exposes countries to supply chain risks during the clean energy transition: if Chinese exports are restricted or prices fluctuate, solar projects worldwide will be impacted.

Since 2020, India has rapidly expanded back-end capacity through policies such as the Production Linked Incentive (PLI) scheme, Basic Customs Duty (BCD), and the ALMM list. However, upstream segments have progressed slowly due to capital intensity, high technical barriers, and sensitivity to energy costs.

Business Decision Logic

The choices of Indian manufacturers are based on multiple considerations:

1. Policy-driven: PLI subsidies and tariff protection reduce the domestic cost of module production, but upstream segments have not yet received equivalent incentives. 2. Market signals: Global developers increasingly demand supplier diversification, and strong domestic demand in India provides manufacturers with a stable order base. 3. Technology upgrade: Efficient technologies such as TOPCon and HJT are rapidly iterating; Indian companies must invest in R&D simultaneously or lose export competitiveness. 4. Risk avoidance: Over-reliance on Chinese imports leads to uncontrollable lead times and procurement costs, pushing companies toward backward vertical integration.

Supply Chain Impact

• Supplier Management: India's module capacity expansion forces Chinese suppliers to adjust their export structure; some Chinese companies are setting up joint ventures in India to circumvent tariffs.
• Procurement Costs: The cost of domestic Indian modules is already close to Chinese levels, but upstream wafer import prices continue to decline due to overcapacity in China, which short-term suppresses willingness to invest in domestic upstream capacity.
• Inventory Levels: To cope with logistics uncertainties, Indian manufacturers have generally extended wafer inventory cycles from 15 days to 45 days.
• Manufacturing Synergy: The lack of upstream segments leads to a fragmented supply chain, low logistics integration, and reduced transport efficiency.
• Risk Exposure: Although India's photovoltaic industry's dependence on China has dropped from 90% in 2020 to 70% in 2026, the wafer segment remains as high as 95%.

Regional Impact- Asia: If India builds upstream production capacity, it will weaken China's dominance, forming a "China + India" dual-center pattern. Assembly bases such as Vietnam and Malaysia may face order diversion. - Europe: The EU is promoting the reshoring of production capacity through the Carbon Border Adjustment Mechanism and domestic manufacturing subsidies. India can serve as an important supplementary supply source, but must meet ESG standards. - North America: The US Inflation Reduction Act stimulates domestic manufacturing, but imports are still needed in the short term. India can expand exports to the US through trade agreements (such as IPEF). - Middle East: Saudi Arabia, UAE, etc. are investing in polysilicon projects. India's cooperation with them can build a cross-regional supply chain. - Latin America: Demand for solar energy is growing in Brazil and Chile, but the manufacturing base is weak. Indian module exports have a cost advantage.