Collaboration with China is "absolutely critical" for India's green energy transition, as it seeks to achieve a 500 GW clean energy target by 2030 and become a net-zero country by 2070, industry sources with insights into emerging trends in India Inc told Sputnik India.
India has been making rapid strides in amping up its solar power manufacturing capacity, which jumped from 38 GW to 74 GW during FY 2024–25, making it the third-biggest solar energy producer. Billions of dollars of investments have been committed by conglomerates such as Adani (Adani Green Energy Limited), JSW Group and the Tata Group (Tata Power, etc) in bolstering the renewable industry, both in manufacturing and end-user domains.
"We have no choice at present but to rely on China in order to achieve our green transition goal. Beijing controls the global rare earth elements (REE) production and supply chains as well as the technology to deploy them appropriately. The West is no match to China in the sphere, so India definitely has a lot to gain by collaborating with the Chinese companies," these sources said.
They explained that the green power generation essentially comprises two key segments- manufacturing (manufacturing of solar PV modules, storage) and end-user (applications - EVs, electricity generation).
In the case of Adani Green, the biggest Indian player in the renewable sector, it has set an energy generation target of 50GW by 2030. In Gujarat, the company is developing the Khavda Renewable Energy Park, set to be the world's biggest with a target capacity of 30,000 MW. In June, the company's chairman Gautam Adani paid an overseas visit to China to hold talks with equipment manufacturers, including top executives from the BROAD Group.
Explaining the stakes involved for India, the world's biggest market and a large market for Chinese photovoltaic (PV) solar modules, industry sources said Adani Greens has been assembling solar power modules in India in line with the Make in India policy.
They said that Indian companies have been seeking to have "end-to-end control" to control the output cost, while noting that 60-70% of the cost in solar electricity generation is incurred on developing PV modules.
"Manufacturing involves panels on the solar modules, the glass, which in turn includes cells (having silica wafers) and silica sand. The module must be able to capture maximum radiation, which is enabled by the use of components such as silica sand," industry sources explained.
In terms of sourcing these inputs, China offers the most cost-competitive option, better priced than alternatives. The logistics costs of securing them from geographies such as Mongolia are significantly higher at the moment. So, Indian companies have no choice but to depend on China in the sector, they underscored.
Industry sources pointed out that storage of electricity on batteries, which in turn involve components made from rare earth elements (REEs), is another important factor.
"You are only able to produce power during the day time. So, storage of power becomes important, where the role of battery storage systems and converters comes in. These components are manufactured using rare earth elements (REEs), where China dominates the global supply chains, controlling nearly 80% of them," they said.
The Indian industry sources said that nobody does the storage function as effectively as the Chinese are doing it at the moment.
"That is why Chinese EV manufacturers like BYD have an edge over their peers. They produce one of the best batteries, which is due to the fact that they have access to REEs like lithium at a minimal cost. Without acing the storage function in solar modules, thermal energy will always be going to have an edge," these sources stated.
India was among the biggest importers of Chinese solar products last year, according to environmental thinktank Centre for Research on Energy and Clean Air (CREA). It pointed out that demand for Beijing’s solar and wind energy imports had been growing across the entire Global South, and not just India.
Moreover, industry sources said that there has been a growing interest in Indian companies about Chinese capabilities in the infrastructure sector.
"We have a lot to learn from China as far as ensuring cost-efficient and time-bound construction activity is concerned. Here, one thing that stands out is the use of precast construction method, wherein structural components are assembled in a factory rather than at the site. We are amazed at the way the Chinese have mastered this technology and see a massive scope of replication here in India," industry sources said.
India's infrastructure boom is set to play a critical role in the Prime Minister's vision of becoming a developed nation by 2047. The infrastructure investments hit a record high of over $120 billion in 2023-24, with a target of acing $1.2 trillion this fiscal.
Commodore (retired) Seshadri Vasan, Director of Chennai-based think tank Centre for China Studies (C3S), told Sputnik India that energy and utility, infrastructure, which includes heavy machinery, as well as active pharmaceutical ingredients (APIs) were some of the areas where China hold an edge over other countries
"China has been quite successful in using the leverage its holds on areas like rare earth supply chains, renewables, heavy machinery and APIs in its dealings with India, US and other nations. As the India-China thaw gains momentum, Chinese Foreign Minister Wang Yi assured EAM S Jaishankar during his August visit to India that Beijing would address New Delhi's concerns in some of these areas by lifting export curbs," Vasan noted.
The Indian thinktank chief, however, singled out rare earths and heavy machinery imports from China as being of particular importance for India.
"Our green transition will effectively come at a standstill without key inputs from China, as alternative sources are unreliable and too expensive. In rare earths, the world acknowledges China's near-complete dominance. Similarly, the world's semi-conductor manufacturing ecosystem depends on China for raw inputs. In India, which has been seeking to attract global semiconductor manufacturers, we can't ignore this reality," Vasan said.
He said that Beijing had become increasingly aware of these realities against the backdrop of global tariff wars and its long-term strategic rivalry with the US.
Vasan stressed that India has its own leverages in its bilateral dealings which no global power could afford to ignore either.
"India's firm stance during the Ladakh border dispute and its precondition of border tranquility being absolutely critical for the normalisation process to sustain is something that China remains wary about, as far as I can see. Even China wouldn't like to upset the cart any further, given that India is the world's biggest market," Vasan said.
The think tank went on to explain that a 1.4 billion-strong market, a booming middle-class and youth with a growing spending capacity, a stable political environment and being the world's fastest growing major economy were India's strengths, which is well-understood by China.
"We seem to be moving in a different direction from where we were last year. Our policymakers seem to have accepted the economic benefits of normalising ties with China, wherein Indian sensitivities like reducing the trade deficit are factored in. But yes, any disturbance at the border risks derailing the normalisation process," concluded Vasan.
At a meeting between Prime Minister Narendra Modi and President Xi Jinping on the margins of the Shanghai Cooperation Organisation (SCO) Summit in Tianjin on 31 August, both the leaders said that they were "development partners and not rivals" and underscored the need to "proceed from a political and strategic direction to expand bilateral trade and investment ties and reduce trade deficit", according to the official readout.