Executive Summary

Over the past eight years, the global photovoltaic (PV) manufacturing landscape has undergone a profound structural shift. Driven by intense domestic market pressures and international trade policies, Chinese PV equipment manufacturers have significantly accelerated the export of turn-key production lines and manufacturing know-how.

Between 2018 and 2026, India's solar module production capacity expanded seventeen-fold, surging from less than 10 GW to 172 GW. Concurrently, the Chinese upstream sector experienced severe margin compression and oversupply, with the top nine PV manufacturers reporting collective estimated losses exceeding RMB 43.5 billion in 2025.

This report use Topease trade data to analyze the underlying structural asymmetries, technology transfer mechanisms, tariff barriers, and future scenarios shaping the bilateral PV supply chain.

1. Structural Shifts in China PV Exports

In 2025, China's total PV product export value reached approximately USD 29.45 billion, representing an 8% year-on-year (YoY) decline—a contraction that narrowed by 25 percentage points compared to 2024, signaling a stabilizing bottom. However, a granular look at the data reveals a stark divergence across specific trade components:

• Solar Cells: Export volumes grew by 90.6% YoY to 111.2 GW, with India emerging as the primary destination.

• Solar Modules: While export volumes ticked up by 5.7%, total export value fell by 15.3% as global module prices dropped below the critical threshold of RMB 0.7/W.

Market Diversification Metrics

The concentration of China's module export markets shifted noticeably in 2025. The number of billion-dollar destination markets shrank from six to three (the Netherlands, Brazil, and Saudi Arabia), while the market share of the top ten destinations declined from 61% to 48%. Conversely, India’s demand for raw cell imports surged, altering the broader composition of global PV trade flow.

2. Technology Transfer and Equipment Interlocking

The rapid scaling of India's PV capacity is fundamentally underpinned by the import of advanced, full-line manufacturing equipment from China. Prominent capital expenditure (CapEx) transactions highlight this trend:

• HJT Lines: Maxwell Technologies secured a RMB 1.9 billion Heterojunction (HJT) full-line equipment order from Reliance Industries.

• TOPCon Lines: Jolywood and SC New Energy delivered multiple Tunnel Oxide Passivated Contact (TOPCon) turn-free systems to major Indian developers.

• Automation: Jingshan Light Machinery executed exports of 5.2 GW automated module assembly lines to the region.

The Cost and Interdependence Factor

Chinese PV manufacturing equipment maintains a significant CapEx advantage, typically costing 33% to 50% less than equivalent European or American alternatives, paired with compressed delivery timelines. Consequently, Indian tier-1 manufacturers remain highly dependent on Chinese machinery, with the import reliance for critical PV manufacturing equipment exceeding 85%. This has created a technical path dependency, tying regional capacity upgrades directly to the R&D and iteration cycles of Chinese equipment providers.

3. Supply Chain Disparities in India Solar Manufacturing

Despite reaching a nominal module capacity of 172 GW by Q1 2026, the local supply chain exhibits an asymmetrical, "inverted pyramid" structure. Upstream and midstream capacities lag severely behind downstream assembly:

• Downstream Modules: 172 GW nominal capacity.

• Midstream Cells: ~30 GW capacity (less than 18% of module capacity).

• Upstream Wafers/Ingots: Near-zero localized capacity, with the first major domestic wafer lines scheduled for commissioning in mid-2026.

• Polysilicon: ~2 GW capacity, resulting in a 90% import reliance on external raw materials.

Operational Challenges

• Capacity Utilization: India’s average module capacity utilization rate hovered at approximately 38% in 2025, driven by a mismatch between domestic installations (~38 GW) and total manufacturing capability.

• Inventory Levels: Module inventory reached 29 GW, a 125% increase YoY.

• Technological Lag: Within India's Approved List of Models and Manufacturers (ALMM), legacy p-type PERC technology still accounts for 63.7% of certified models. In contrast, the global market has shifted rapidly toward n-type architectures (TOPCon/HJT/BC), which constitute over 85% of current Chinese production.

• Cost Premia: Domestically manufactured Indian modules carry a 48% cost premium compared to standard imported Chinese modules; this premium rises to 143% for components requiring fully localized supply chains.

4. Multi-Lateral Trade Barriers and Policy Shifts

The financial viability of India's downstream capacity is heavily intertwined with the US market, which absorbs roughly 97% of India's total solar module exports. This high concentration introduces substantial regulatory risk.

US Tariff Impacts

In February 2026, the US Department of Commerce issued preliminary affirmative determinations in its anti-dumping and countervailing duty (AD/CVD) investigations:

• Countervailing Duties (CVD): A preliminary rate of 126% levied against Indian solar modules.

• Anti-Dumping Duties (AD): A preliminary rate of 123% levied against Indian solar cells.

The final determinations are scheduled for July 6, 2026. If sustained, these tariffs will alter the landing cost of Indian components in the US, making them less competitive against alternative global suppliers. Diversification into alternative markets (e.g., the Middle East or Africa) remains challenging due to the entrenched market share of low-cost Chinese suppliers, who currently command over 70% of the African solar market.

China's Regulatory Interventions

Concurrently, regulatory frameworks within China are pivoting from volume expansion to technology protection and fiscal consolidation:

• Export Controls: Effective January 1, 2026, specialized PV manufacturing equipment was integrated into dual-use export control frameworks.

• Fiscal Incentives: Effective April 1, 2026, export tax rebates for select PV products were eliminated or reduced (covering 249 HS codes). Notably, solar cell export tax rebates dropped from 9% to 6%, with a complete phase-out slated for 2027. This directly alters the pricing strategy for low-margin module exports and encourages a strategic focus on high-value components.

5. HS Code Analytical Matrix and Bilateral Trade Flow

Topease trade data tracks the structural shift from finished module exports to upstream inputs and components. The table below delineates the 10 core HS codes governing the bilateral PV trade between China and India.

6. Strategic Outlook: Three Supply Chain Scenarios

The convergence of Indian manufacturing expansion, US tariff enforcement, and China’s policy shift will likely drive the global PV market toward one of three scenarios over the 2026–2030 horizon:

Scenario A: Low-Utilization Assembly Hub (Baseline – High Probability)

India continues expanding nominal module capacity toward 200 GW, but utilization rates remain suppressed at 30%–40% due to the loss of US market access via AD/CVD tariffs. Upstream reliance on Chinese cells and wafers persists, positioning regional factories primarily as regional assembly centers with limited vertical integration.

Scenario B: Upstream Supply Chain Integration (Risk Pathway – Moderate Probability)

Supported by successive rounds of the Production Linked Incentive (PLI) scheme, Indian manufacturers successfully integrate backward into wafer and cell manufacturing over the next 5 to 8 years. As localized supply chains mature, India emerges as a direct competitor to China in third-party markets across the Middle East and Africa.

Scenario C: Next-Generation Technological Bifurcation (Opportunity Pathway – Moderate Probability)

The global PV market splits along technological generations. While India absorbs legacy p-type and early n-type (TOPCon) capacities, Chinese manufacturers establish a new technological moat through the commercialization of Perovskite-Silicon tandem cells (targeting efficiencies of 26.5%–28%) and advanced Back Contact (BC) architectures. China shifts from an equipment exporter to a global standard and intellectual property (IP) licensor, while scaling secondary growth curves in smart energy storage systems (BESS) and high-efficiency string inverters.

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