Divakar PrakashDecember 30, 2025 07:27 AM IST First published on: Dec 30, 2025 at 06:15 AM ISTFor years, India relied on Chinese imports to meet its solar needs. That dependence is now being challenged. In 2024, domestic companies added 25.3 GW of new module capacity, nearly doubling national manufacturing strength. The PLI scheme, central to this shift, encouraged investment and signalled India’s intent to become more than just a consumer of global technology. The adoption of TOPCon cells shows that India is moving toward higher-value innovation.Yet the picture is not without contradictions. Despite the surge in domestic capacity, India still imported nearly 66 GW of modules and cells in 2024, while exports slightly declined. Upstream integration remains limited: Only 2 GW of wafer capacity has been commissioned, compared to nearly 40 times that in downstream module production. Without addressing polysilicon and wafer production, India risks shifting its dependence rather than eliminating it.AdvertisementIn the first nine months of FY2025, clean energy attracted $3.4 billion in foreign investment — more than 80 per cent of all power sector inflows. Competitive auctions have driven tariffs to record lows, making renewable power among the cheapest sources of electricity in India. Developers and financiers see an opportunity in the scale of demand and the government’s commitment to clean energy. However, the financial ecosystem has stress points. DISCOMs struggle with unpaid dues. In some states, attempts to renegotiate contracts after auctions have raised concerns. Such uncertainty can undermine investor confidence.Around 60 GW of renewable projects remain constrained by inadequate transmission infrastructure. Without sufficient grid expansion, clean power cannot flow to where it is needed. Curtailment — when grid operators reduce renewable output due to transmission or stability issues — adds another layer of complexity. Developers often receive no compensation for curtailed power, making financial modelling difficult and raising the cost of capital. Compared to advanced economies, India’s renewable financing costs are nearly 80 per cent higher, in part because of these risks.The National Green Hydrogen Mission aims to produce 5 million metric tonnes of green hydrogen annually by 2030. Pilot projects are already underway in steel, refining, and transportation, sectors where direct electrification is difficult. The strategic logic is sound: India currently consumes about 5 million tonnes of grey hydrogen, produced from fossil fuels. Yet the economics remain challenging. Current production costs of $4.1–$5.0 per kg are several times higher than conventional hydrogen. Even with projected declines to around $2.4 per kg by 2030, commercial viability will likely require subsidies, carbon pricing, or regulatory mandates. Infrastructure for storage, transport, and end-use applications is nascent, requiring investment on a scale that may exceed production costs. The sector faces a chicken-and-egg dilemma: Industries hesitate to retrofit without guaranteed supply, while producers hesitate to invest without confirmed demand.AdvertisementThe power sector needs protection of contractual sanctity. Transmission networks must expand in step with generation capacity, and curtailment risks need clearer frameworks. For green hydrogen, realistic timelines and demand-creation will be crucial. If these challenges are met, India could become a model for other nations navigating the complexities of energy transition.The writer is a corporate finance and strategy professional