Is India "Stealing" the Photovoltaic Industry? Don't Panic Just Yet—Understand the Logic Behind the Massive Capacity Shift
Hello everyone, I'm your financial analyst. Recently, there's been a particularly hot topic online that's even a bit alarming: it claims that India's photovoltaic (PV) industry is expanding at an incredible pace, with its capacity increasing by 17 times in just 8 years, while Chinese PV giants are suffering losses. Could it be that India has "stolen" China's industry? Are Chinese companies "aiding the enemy" by doing so?
Let me reassure you: It's not that simple, and it's not that scary either. This is more like a passive consequence of China's own "capacity surplus" rather than an intentional strategic move by India.
To make it clearer, I've broken down this in-depth article from an Indian think tank into five key points and explained them in plain language.
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1. Why the sudden panic? It's all about the stark contrast
Previously, the relationship between China and India in the PV industry was straightforward: China produced, and India bought. We were the sellers, and they were the buyers, and everything was relatively peaceful.
But recently, the situation has changed:
- In India: PV module production capacity has soared from less than 10 gigawatts (GW) in 2018 to an estimated 172 GW by 2026. That's almost equivalent to the total new installations worldwide in a year. India has gone from being a pure buyer to the world's second-largest manufacturer.
- In China: Leading companies like Longi, Jinko, and Trina have started to suffer losses since the end of 2023. By 2025, 11 out of 15 listed companies were in the red, with total losses amounting to 50 billion yuan.
This stark contrast between India's booming growth and China's giants' losses has caused a stir in domestic opinion. Many people think that Chinese companies have sent equipment, technology, and engineers to India, thereby helping their competitors grow, which is seen as "aiding the enemy."
Journalist's comment: This sentiment is understandable, but it's somewhat a case of "survivor bias." We only see that India's capacity is growing rapidly, yet we overlook the fact that this is because China is producing too much and the competition is too fierce.
2. Why do Chinese companies go to India? Because they can't survive domestically
Many people ask: If Chinese companies knew they would face competition from India, why would they still sell equipment there? The answer is harsh: Because they would face extinction if they didn't.
It's like a market with too many vendors and too cheap products—each sale results in a loss.
- How severe is the capacity surplus? China's PV module capacity exceeds 1100 GW, but the global demand is only 600 GW. The polysilicon capacity is 3.5 million tons, while the global demand is only 1.4 million tons. In other words, more than half of what we produce goes unsold.
- How brutal is the price war? Module prices have fallen below the cost of production of 0.7 yuan per watt. Many factories are operating at less than 60% capacity, and every sale results in a loss. Additionally, the price of silver doubled in 2025, further increasing costs and squeezing profits.
In this competitive landscape, domestic orders are insufficient, and prices are pushed to the lowest levels. At this point, India extends an olive branch: "I want to buy your entire production line."
- Doing the math: Selling modules domestically might result in negative margins, but selling the entire production line to India can yield a gross profit margin of over 35%.
- Conclusion: For individual companies, this is a lifeline. Although in the long run, it may help India's competitors grow, in the short term, survival is of utmost importance. This is a classic example of a "collective action dilemma"—everyone wants to sell equipment to survive, and as a result, capacity is exported.
3. Can India really replace China? Don't overestimate it; it's just a "super assembly factory"
Although India's capacity figures are impressive, we need to see the reality. Currently, India's PV industry is unbalanced, with a strong focus on the assembly stage and a lack of strength in the upstream.
- Upstream weaknesses: The PV industry chain is long, from sand to polysilicon, then to silicon wafers, cells, and modules. India's strength lies in the final assembly stage.
- Polysilicon: India's capacity is only about 2 GW, with over 90% imported (mainly from China).
- Silicon wafers: India is just starting out, with very limited capacity.
- Solar cells: Its capacity is about 30 GW, less than one-sixth of its module production.
- Dependent on Chinese equipment: India relies on China for key equipment such as single-crystal furnaces and PECVD coating machines, with over 85% of these imports coming from China.
- Market risks: India's module exports are heavily dependent on the US market. If the US (for example, under "Trump 2.0" policies) imposes tariffs, Indian exports would be severely impacted.
Journalist's comment: India is more like a "high-end contract manufacturer," using Chinese raw materials and equipment to assemble finished products for sale. It doesn't control the most critical upstream materials and advanced equipment. So, saying India has "stolen" China's industry is an exaggeration; calling it a "potential competitor" is more accurate.
4. China is starting to take action: From "liberalization" to "regulation"
Facing the outflow of industry, the Chinese government and industry have not stood by. Instead, they are taking a series of measures to address the issue:
1. Export controls: PV module production equipment has been added to the "Dual-use Items and Technologies Import and Export License Management Catalog." This means that if you want to buy China's advanced equipment, you need approval and a review of the situation.
2. Cancellation of export tax rebates: Starting April 1, 2026, export tax rebates for PV products have been canceled. This significantly increases export costs, forcing companies to either improve the value of their products or reduce low-end exports.
3. Strategic adjustment: Officials are urging companies to avoid price wars and not sacrifice long-term industrial security for short-term survival. They are encouraging companies to move up the value chain rather than compete on price.
4. International action: China has filed a complaint with the WTO against India for discriminatory measures targeting solar cells, modules, and IT products.
Journalist's comment: These actions show that China has realized the risks of capacity overflow and is shifting from encouraging exports to regulated control. However, this will take time, and the effectiveness depends on whether India's domestic industry chain can truly fill the gaps.
5. A deeper concern: Is PV just the beginning? What about batteries and electric vehicles?
This is what Chinese strategists are truly worried about. PV is just a microcosm of a larger trend: India is following China's previous development path—using policy subsidies, tariff protection, and accepting transferred capacity to quickly build its own industrial base.
- Policy similarities: India is implementing measures like the "Production Linked Incentive Plan (PLI)," imposing import tariffs, and creating "local manufacturing access," which are very similar to the strategies China used to support the PV and electric vehicle industries.
- Risk spread: If India succeeds with PV, it may follow the same approach in areas like energy storage, power batteries, and even electric vehicles.
- Current situation: Chinese battery manufacturers are making substantial profits by setting up factories in India.
- Future potential: In a few years, India could have a complete battery industry and compete with China.
- Time frame: China took 20-30 years to industrialize, but India aims to do it in 10-15 years, leaving China with less time to adjust.
Journalist's comment: This is the real "Achilles' heel." China's domestic economy faces challenges such as weak domestic demand and structural capacity surplus. If multiple industries (PV, batteries, electric vehicles) experience both internal competition and capacity overflow, the impact on the Chinese economy will be systemic.
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Conclusion: How should we view this "China-India PV rivalry?"
1. It's not about "stealing," but about "capacity overflow": Chinese PV companies are going to India to reduce domestic surplus and ensure their survival, not to aid India.
2. India has potential, but not the strength: Its industry is growing rapidly, but it lacks upstream capabilities and relies on Chinese equipment, so it cannot replace China's core position in the global supply chain in the short term.
3. China is taking action: Through export controls, tax policy changes, and WTO litigation, China is trying to balance corporate survival with industrial security.
4. Be wary of "path dependence: PV is just the beginning. China needs to be cautious of India replicating similar strategies in battery and electric vehicle sectors and accelerate domestic economic restructuring to address the root causes of capacity surplus.
Advice for the public:
Don't panic about the end of China's PV industry, but recognize that the era of "cheapness winning" is over. In the future, the competition between China and India will focus on technology, efficiency, and the completeness of their industrial chains. For investors, it's more important to focus on companies that control core materials and advanced equipment and have a global presence, rather than just looking at capacity figures.