India is rapidly positioning itself as a global hub for clean energy manufacturing, supported by strong policy incentives and rising domestic demand. Government initiatives such as the Production Linked Incentive (PLI) schemes and import duties have accelerated investments in solar and battery manufacturing capacity. However, despite the rapid expansion, the sector continues to face structural gaps in technology adoption, supply chain depth, and cost competitiveness. These challenges could influence India’s ability to compete globally in the clean energy manufacturing ecosystem.
Solar Manufacturing Capacity Expands Rapidly
Solar manufacturing sector has witnessed significant growth in recent years. The country’s module manufacturing capacity has already surpassed 120 GW, driven largely by government incentives and policy support. Yet, capacity utilisation remains uneven across facilities. While the installed capacity is substantial, many plants continue to operate below their optimal production levels.
In terms of technology adoption, Tunnel Oxide Passivated Contact (TOPCon) modules now account for nearly 70% of India’s installed module capacity. This technology offers a balance between efficiency and cost, making it attractive for manufacturers.
By contrast, Heterojunction Technology (HJT) remains at an early stage, contributing only about 1% of installed capacity. The limited adoption reflects the industry’s cautious approach toward next-generation technologies that require higher capital investment and specialised expertise.
Battery Manufacturing Progress Remains Slow
While solar manufacturing has expanded rapidly, battery manufacturing has progressed at a slower pace. Under the government’s Advanced Chemistry Cell (ACC) PLI scheme, India aims to develop 50 GWh of battery manufacturing capacity.
However, only around 1.4 GWh has been commissioned so far, highlighting delays in project execution and investment decisions. Industry experts point to technology complexity, capital intensity, and supply chain uncertainties as key factors slowing progress in this segment.
Heavy Dependence on Global Supply Chains
Despite expanding domestic capacity, India continues to rely heavily on imported upstream components. Critical materials such as polysilicon, wafers, and essential minerals are still largely sourced from overseas markets.
Currently, China controls more than 80% of global solar supply chains, creating significant pricing and geopolitical risks for emerging manufacturing hubs like India.
Moreover, India’s supply chain ecosystem remains relatively shallow, particularly in the production of ingots and wafers, which are essential inputs for solar cell manufacturing. Although domestic value addition is gradually improving, gaps in upstream manufacturing remain a major challenge.
Critical Mineral Dependence Creates Vulnerability
The clean energy sector also depends heavily on critical minerals such as lithium, cobalt, and rare earth elements. At present, India imports most of these resources, exposing the industry to global price volatility and supply disruptions. Recognising this challenge, policymakers have begun exploring local sourcing mandates and supply chain diversification strategies. However, industry observers note that execution risks remain significant, especially given the limited domestic availability of these minerals.
High Costs Impact Competitiveness
Cost competitiveness remains one of the biggest hurdles for India’s clean energy manufacturing ambitions. Solar modules produced using domestically manufactured cells can cost more than 140% higher than comparable Chinese products. This significant price gap affects both domestic profitability and export competitiveness. Additionally, many manufacturing facilities continue to operate at capacity utilisation levels below 30%, which further increases production costs and pressures margins.
Technology Adoption Shaping the Industry
Technology choices are playing a crucial role in shaping India’s manufacturing landscape. Currently, TOPCon technology dominates the market because it offers a practical balance between performance and cost. In contrast, HJT technology provides higher efficiency but requires significantly higher capital expenditure and specialised supply chains, making adoption slower. Meanwhile, next-generation technologies are still in the pilot stage, and their timelines for large-scale commercial deployment remain uncertain.
Export Opportunities and Trade Barriers
Despite these challenges, India is gradually strengthening its position in the global solar market. In 2024, the country exported nearly 5.8 GW of solar modules, benefiting from global supply chain diversification strategies such as the “China Plus One” approach. However, export opportunities also face growing uncertainties. Several key markets, particularly the United States, are introducing stricter trade regulations and tariffs. At the same time, domestic demand remains highly policy-driven and cyclical, which adds another layer of unpredictability for manufacturers.
Balancing Ambition with Structural Reforms
India’s clean energy manufacturing sector has clearly entered a high-growth phase, supported by strong policy initiatives and rising global demand for renewable technologies. Nevertheless, supply chain gaps, technology adoption challenges, and cost pressures continue to shape the industry’s trajectory. As reported by cleanfuture.co.in, going forward, deeper supply chain integration, improved capacity utilisation, and greater technological capability will be critical if India aims to emerge as a globally competitive clean energy manufacturing hub.
