The Modi government has set its solar installed-capacity target very loudly — 100 gigawatts, an ambition that sounds like it would lead India into a green future. But in July 2026, a deep-dive analysis by The Telegraph, translated and relayed by Nanya Yanjiu Tongxun (a Chinese-language South Asia research briefing), tore that shell open: installed capacity has risen, yes — but standing behind that number is an entire set of mutually offsetting policies, a market dragged down by state–business entanglement, and a dependence on China that can never quite be shaken.
India's solar industry is not "booming." It is being squeezed by three forces at once: protectionism has pushed up costs, structural losses at the distribution utilities have suppressed actual absorption capacity, and corruption rooted in deep state–business ties has further distorted the market. The installed-capacity numbers are rising — but so is the economic cost of every panel that goes up.
From a 100 GW Target to 25 GW Stranded
In 2015, the Modi government raised India's solar installed-capacity target to 100 gigawatts. In a global context that number is not extreme — over the same period China's solar capacity surged from tens of gigawatts to hundreds — but the problem India faces is entirely different from China's. China had a complete manufacturing supply chain and low-cost financing channels; India's solar modules, for a time, depended almost entirely on imports.
The Modi government chose a protectionist route. It introduced the Approved List of Models and Manufacturers (ALMM) system, requiring all renewable-energy generation projects to procure modules and cells from that list, while simultaneously imposing high import tariffs. The logic was clear: force domestic demand, through policy, to nurture domestic manufacturing.
The result?
Module prices did not fall — they rose. Solar tariffs rebounded from roughly 2 rupees per kilowatt-hour in 2020 to 2.86 rupees per kilowatt-hour in 2025 — even as global solar module prices kept declining, India's moved in the opposite direction. At least 25 gigawatts of projects were delayed or stranded. India's installation pace did soar, from 10 GW in 2021 to 60 GW in 2023 — but the main driver was importers stockpiling ahead of the tariffs' effective date, not a ramp-up in domestic production capacity.
Protectionism Built a Zero-Sum Market
The logic of ALMM is impeccable on paper: restrict procurement sources → nurture domestic manufacturing → expand capacity → achieve scale economies that lower cost → feed exports back into the system. In reality, it produced a zero-sum situation.
Developers had relied on cheap panels imported from China to push tariffs down — a practice that directly undercut domestic manufacturers. By 2023, India had more than 100 module manufacturers, but fewer than four in ten offered high-quality capacity, and products whose actual generating output fell short of specification appeared again and again. In other words, ALMM sheltered the name of "Make in India" without simultaneously nurturing its quality.
At the same time, the finances of the power distribution companies (DISCOMs) have deteriorated for years — and the root cause of their illness has nothing to do with solar: line losses on aging grids, power theft, subsidized tariffs. But the "must-connect" mandate for solar turned them into the ultimate bearers of policy cost. To absorb solar power, DISCOMs must also shoulder the fixed costs that coal-fired units can no longer recover as their utilization rates fall. The result: DISCOMs routinely delay payments to developers and resist new solar procurement.
To absorb solar power, distribution utilities must also bear the fixed costs that coal-fired units can no longer recover because they sit idle or run at reduced utilization — forming a hidden subsidy burden.
When an industry is squeezed from both the supply and the demand side at once, the margin left for policy has already been used up.
State–Business Entanglement — The Adani Case Is the Tip of the Iceberg
In charges disclosed by the U.S. Securities and Exchange Commission in 2024, the Adani Group was accused of bribing Indian officials to secure long-term power purchase agreements at above-market tariffs. This is not an isolated case. In India's solar industry, project bidding is dominated by the state-owned Solar Energy Corporation of India (SECI); the pace of installation depends on the DISCOMs' ability to pay and the rhythm of government tenders; and large amounts of private capital remain on the sidelines. A structure of state-led bidding plus deep participation by politically connected firms creates a systematic channel for corruption and economic rent.
The outcome: official corruption keeps pushing tariffs higher, and both state budgets and the decarbonization agenda are held back.
The View From 2026 — The Import Paradox Is Deepening
The Modi government is now preparing to extend ALMM regulation from modules to cell production. In the short term this will push the price of India's solar modules up further. The reason is simple: cell production requires backward integration into ingots, wafers, and polysilicon — and most Indian assemblers simply lack the financial strength to bear the cost of such deep backward integration. A country that wants self-sufficiency in solar manufacturing needs more than customs lists and policy instruments — it needs a semiconductor-grade industrial ecosystem and economies of scale. India has neither.
India's solar industry surged from 10 GW of installations in 2021 to 60 GW in 2023, and module output is on track to reach 110 GW of capacity in 2025–2026 — but this does little for India's own energy transition. Inside the walls of protection, price signals do not lie: while solar panels keep getting cheaper around the world, India's power stations are installing panels that keep getting more expensive.
It is a wearying cycle: the more you protect, the more dependent you become; the more dependent you become, the more protection you need.