"India's solar energy is already very cheap, but they still choose China's."

Questioning AI · Why do buyer preferences remain unchanged as India’s solar energy cost gap narrows?

[Text / Observer Network Wang Yi] Driven by surging electricity demand, India’s solar industry is expanding at an astonishing pace. However, an awkward reality has emerged: even though the price of India’s photovoltaic modules has come close to China’s, overseas buyers still prefer Chinese products.

On April 3, the Nikkei Asia, citing data from research firm Mercom India Research, reported that since 2024—when capacity doubled to more than 210 gigawatts—the total capacity of Indian photovoltaic manufacturers has nearly tripled relative to domestic demand. Against this backdrop, finding new markets is a key challenge the industry constantly faces.

India’s most important export market, the United States, imposed nearly 126% anti-dumping and countervailing (anti-subsidy) tariffs on Indian solar cells and modules at the end of February, sharply increasing export pressure.

The report says another major obstacle facing India’s solar sector is a cost disadvantage. For a long time, Indian photovoltaic modules have carried a premium over China’s, especially in markets that have not proactively “decoupled” from China.

But this price gap is gradually narrowing. Data from well-known renewable energy research firm EUPD Research shows that at the beginning of 2024, Indian modules cost about $0.09 more per watt than Chinese products. However, as scale effects become more apparent, by the end of March this year, the gap had narrowed to about $0.054 per watt.

This week, China continued its decade-plus policy of fully canceling VAT export rebates for photovoltaic products. EUPD Research expects this move to further narrow the price gap between China and India to about $0.046 per watt.

“We are steadily approaching a truly competitive stage.” Prashant Mathur, CEO of Indian solar manufacturer Saatvik Green Energy, said, “From a strategic perspective, this is a critical moment for Indian manufacturers.”

Even so, overseas customers are not rushing to switch to India. Every buyer interviewed by Japanese media said they still prefer Chinese photovoltaic products.

Sibi Vetha Raj, Business Development Manager at Dubai’s Falcon Energy, said: “We used to try purchasing Indian products, but the price was very high—the gap was close to 20%.”

Jemshiyas Parambil, who leads the Positive Zero project in Dubai, also said bluntly: “We compared very early on—China’s prices are much lower, and there are more options among Tier 1 manufacturers. Indian manufacturers are not recognized much here.”

It is reported that only three Indian companies are on BloombergNEF’s global Tier 1 photovoltaic module manufacturer list: Adani Solar, Vikram Solar, and Vali Energy Limited. The rest are almost monopolized by Chinese firms.

Two companies in Bangladesh even said that Indian manufacturers currently are not really doing market promotion seriously, and they are unsure whether India is capable of supplying stably.

Ironically, despite what Bangladeshis are saying, Sudhir Reddy, Chief Strategic Officer of India’s Premier Energies, is still “shifting blame” to Chinese companies. He said that in the past his company exported to Bangladesh, but after “intensified Chinese low-price dumping,” it stopped such business.

Solar experts point out that in order for overseas buyers—especially those in emerging markets in the Middle East, Asia, and Africa—to truly view India as an alternative source of supply, the price gap between Indian and Chinese solar still needs to narrow further—at least to roughly half of the current difference.

On November 16, 2025, at a 12-megawatt photovoltaic power station in the Suraljipur open-pit coal mine area in India, workers are cleaning solar panels. IC Photo

Achieving this goal may take about three years, relying on larger-scale expansion and vertical integration in battery and silicon wafer manufacturing to enhance cost control capabilities. At present, Indian companies still depend on China to provide upstream components. In addition, India’s 25% basic tariff on imported Chinese batteries further drives up the prices of end modules.

Rajan Kalsotra, Senior Advisor at EUPD Research, analyzed that India’s overall costs for electricity, financing, and raw materials are higher than China’s. Even if the price gap narrows, the structural cost disadvantage will remain.

The Nikkei Asia noted that India’s domestic policy protections also create some problems. Marius Mordal Bakke, Vice President of energy research firm Rystad Energy, said that because the Indian government requires that nationally supported projects must use domestically made components, Indian manufacturers have substantial pricing power in the domestic market. “Because India’s battery production capacity is still not large, to a certain extent companies can set their own prices, and there are almost no external competitors entering.”

It is reported that currently, Indian manufacturers’ orders are piling up. The next 6 to 8 months are already fully booked, but they have not yet truly felt the pressure of overcapacity, allowing them to maintain relatively high profit margins.

Prerna Prabhakar, a researcher at the Indian think tank Centre for Social and Economic Progress, also believes that to protect domestic industries, India’s policies to a certain extent “have undermined supply-chain competitiveness,” and the lack of external competitive pressure suppresses innovation.

This is also reflected in R&D spending: data from energy consulting firm Wood Mackenzie shows that Chinese manufacturers on average allocate about 4% of their revenue to R&D, while Indian firms spend less than 1%.

Yana Hryshko, head of solar supply chain research at the company, pointed out that due to an efficiency gap of about 1.5 percentage points, Indian modules need more panels to generate the same amount of electricity, further raising costs. “Indian module prices are higher, but the technology level is more backward.”

In Kalsotra’s view, besides price, other non-cost factors will also affect how popular Indian photovoltaic products are, such as sustainability and reliability. He believes that although demand for new energy in the Middle East and other markets has increased due to geopolitical tensions, this will not significantly improve Indian manufacturers’ export prospects—“the Middle East and European markets are basically already occupied by Chinese manufacturers.”

This article is an exclusive report by Observer Network. Reproduction is prohibited without authorization.