India’s solar build-out is no longer an ambitious plan, but is already a reality in many Indian states, driven by the government’s policy to push the penetration of solar energy across the country. The next five years will be the deciding factor on whether the country secures strong energy insulation or continues to live under a foreign price setter, dominated by China as of now. Where does India fit then? While domestic manufacturers keep announcing record capacities, the heart of the chain remains offshore with China.
India has already set its bar. As per a recent report by Anand Rathi, India requires 338 GWdc of solar capacity, and the country is in the midst of trying to construct an entire supply chain before the next cycle of global price resets. According to Anand Rathi, “India has no commercial ingot-wafer capacity today against 100+ GW cell/module plans, leaving a critical reliance on imports; China controls over 95% of global wafer supply, driving pricing and supply risk.”
While domestic manufacturers keep announcing record capacities, the heart of the chain remains offshore with China. The next five years will test whether policy or precedent sets the pace.
The wafer pinch: India’s missing link that could blow up valuations
Every bullish forecast on India’s solar surge rests on one fragile assumption: that the wafer bottleneck won’t choke the industry. Right now, that’s the weakest link in the entire value chain.
The Anand Rathi analysis framed wafer capacity as the make-or-break factor for valuations and singles out a narrow timeline: meaningful domestic wafer capacity will not arrive before FY27, leaving Indian makers exposed to imported wafers and to China’s price cycles.
The report noted, “Meaningful wafer capacities are unlikely before FY27,” which means that the bulk of announced cell lines in FY25–26 will operate on imported wafers.
India has no commercial ingot-wafer capacity today against 100+ GW cell/module plans, leaving a critical reliance on imports. Meanwhile, wafers account for roughly 60–65% of cell cost (which is a lot). Because wafers dominate the cost structure, a price swing up or down can speed up or delay the point at which a new cell line reaches normalised EBITDA.
An ingot is a block of purified silicon. A wafer is a thin slice cut from that block. Every solar cell is built on a wafer, which makes it the basic physical unit of the entire solar manufacturing chain.
The China Price Threat
The report pointed out that Indian companies still need “access to China’s skillset and technological know-how in polysilicon, ingot-wafer and advanced cell machinery” to set up competitive upstream lines. Policy support for this stage is planned, but it sits in the later phases of the government’s roadmap, so the push has not reached the same intensity as it has for cells and modules. Until that changes, India’s upstream will remain tied to imported wafers, regardless of how quickly downstream factories expand.
To top it off, China controls over 95% of the global wafer supply. In addition to that, it also dominates polysilicon, cell, and module production. India’s downstream economy, therefore, remains closely linked to upstream dynamics in East Asia, regardless of domestic capacity announcements. Anand Rathi’s valuation treats wafer access as the sector’s blind spot.
Why is India not self-sufficient when it comes to ingot wafers?
The report observes that India’s dependency on China for ingot wafers makes it highly vulnerable. A delay of even a year exposes the industry to another global price reset before domestic upstream lines will stabilise. Right now, India is entering it with no commercial wafer base.
China’s price shock risk
India’s manufacturers face a familiar threat: a price drop triggered by Chinese oversupply. The Anand Rathi report said, “Global supply additions continue to run ahead of demand and pricing.” trends will depend on utilisation levels in China.” When Chinese factories run below optimum levels, they do not slow output; they cut prices. That is what caused the 2023–2024 crash in Average Selling Price, and it can happen again.
For Indian producers, even a $0.05–0.07 per-watt correction can wipe out EBITDA. Plants still absorbing depreciation on new lines and managing higher interest costs. According to Anand Rathi, they do not have the cushion to handle sudden price resets. Those without vertical integration feel the strain first because their input cost does not fall as fast as the selling price.
Policy support helps with DCR-linked tenders, but it cannot isolate the sector from global Average Selling Price (ASPs). Developers benchmark to international prices, lenders push for leaner assumptions, and EPC contractors respond to landed costs. If China’s next wave of polysilicon and wafer supply lands before India builds meaningful upstream capacity, local prices will move down in line with the global cycle.
Operational context, policy timing, technology transitions
The government wants more of India’s solar equipment to be made inside the country. It has set aside Rs 24,000 crore in incentives and is bringing in the new rules step by step. From June 2026, only India-made solar cells can be used in government-backed projects. Around 2028, the same rule will extend to wafers, meaning only wafers made by a few approved Indian manufacturers will qualify. At the same time, solar technology is changing fast. Older production lines are already losing relevance, newer ones cost more to set up, and an even more advanced version is still too expensive for most companies. This rapid change means a factory built today may need upgrades within just a couple of years, so companies must keep investing simply to stay competitive, the firm reasoned.
The silver lining: Demand, capacity scale give India real momentum
For all the stress points, the report also pointed to strengths that give India a real base to build on. The first is demand. The report stated that India’s solar requirement remains large and rising, anchored by “consumption growth and government targets.” Few markets in the world carry a comparable project pipeline, and this steady domestic demand offers manufacturers a cushion when exports soften.
Module capacity is expanding quickly, too. Announced domestic module lines are expected to touch about 265GW by FY28, more than double today’s levels, the firm added. This gives Indian producers an assembly scale well ahead of most emerging markets, even if upstream capacities lag for now.
Policy support remains another advantage. Various government initiatives create a predictable domestic offtake, and PLI-II’s Rs 24,000 crore allocation is aimed at building an integrated base rather than small standalone plants, as per the report. These measures cannot fully protect the industry from global prices, but they provide a stable environment during the build-out phase.
State-level demand adds another positive. Rajasthan, Gujarat, Karnataka, Tamil Nadu and Andhra Pradesh continue to anchor renewable additions, and the report said project pipelines in these states remain “robust.” This gives manufacturers clearer visibility on dispatch schedules and reduces logistics uncertainty.
Taken together, the Anand Rathi report highlighted that as India enters the next phase with a strong demand cushion, rapid module expansion, and a growing group of integrated manufacturers can compete at scale. These factors do not erase the wafer gap, but they do give the sector a path forward through FY27–FY28.
