When China sneezes, as the (modified) adage goes, the world catches a cold. And India, at least when we’re talking about solar power, is today the first to start sniffling.
The year 2018-19 was a special one for India’s solar industry. For the first time since 2014, new installations of solar power declined, by about 10%. To put that in context, installations had roughly doubled in each of the two previous years.

The obvious reason was a set of safeguard duties imposed on imports of solar equipment starting July 2018. Intended to insulate domestic manufacturers from cheaper Chinese solar modules, the move drove developers to halt plans for new solar plants.
A seemingly straightforward tale of a protectionist policy that backfired. But behind it lies a complex interplay that results in Chinese policy effectively dictating the dynamics of the Indian solar industry.
And with Indian policymakers unable to put together anything more than a piecemeal response, the country’s vaunted National Solar Mission—with an ambitious goal of 100 GW of solar power generating capacity by 2022—is lumbering along, far short of its targets.
The China shadow
The Chinese government, over the past two decades, has progressively increased support to expand both renewable energy generation and equipment manufacturing.
By 2012, China-based solar module makers had enough capacity to supply the entire world’s solar panel needs. The resulting glut in the early 2010s led to the collapse of several Chinese—as well as American and European—manufacturers. Both the US and the European Union had slapped anti-dumping and anti-subsidy tariffs on Chinese solar cells and modules by the end of 2014. Undeterred, Chinese companies set their sights on a new, rapidly growing market—India.
The Narendra Modi government in 2015 raised the country’s solar capacity target to the current 100 GW from the earlier 20 GW. (As part of a bigger renewable energy target of 175 GW from solar, wind and small hydropower projects by 2022.) India rose to become China’s biggest solar export market in 2017, accounting for about 30% of shipments by Chinese manufacturers.
Much as in the US and Europe before, cheap Chinese equipment drove down costs for developers, giving India some of the lowest prices for solar-based electricity tariffs in the world. Tariffs fell to less than Rs 3 ($0.04) per kilowatt-hour as companies bid furiously for projects in 2016 and 2017, as imports accounted for about 90% of module sales.