China's Solar Export Policy Shift Creates Opportunities for Indian Firms
China has announced a major policy change that could reshape global solar energy markets. The country plans to eliminate export rebates on photovoltaic products and reduce battery rebates starting April 2026, with complete phase-out by early 2027. This development presents significant opportunities for Indian solar manufacturers who have long competed against heavily subsidized Chinese products.
Leveling the Global Playing Field
For decades, China has dominated the global solar panel value chain, accounting for approximately 80% of production. The country's export rebates have provided Chinese manufacturers with substantial cost advantages, translating to discounts of 9-13% on their products. With these subsidies being removed, global solar panel prices are expected to rise proportionally.
This policy shift comes at a crucial time for India's solar industry. Despite production-linked incentives and customs duties on imports, manufacturing solar cells in India still costs up to twice as much as in China. The removal of Chinese subsidies could help narrow this competitive gap significantly.
Indian Solar Module Manufacturers Poised for Growth
Two major Indian companies stand to benefit substantially from these changes. Waaree Energies leads the market with 5.4 GW of solar cell manufacturing capacity and 18.7 GW of module capacity. The company has dramatically increased its export revenue from 17% in FY25 to 47% in Q2FY26, demonstrating strong international growth momentum.
Premier Energies operates with 5.1 GW of cell capacity and 3.2 GW of module capacity. Unlike Waaree, Premier currently derives 99% of its revenue from domestic sales, giving it substantial headroom for export expansion. Both companies maintain healthy Ebitda margins of 25-30% and have negative net debt positions, providing financial flexibility for future growth.
Market response to China's announcement has been positive but varied. Premier's shares gained 4% on January 10, while Waaree's rose by 1%, reflecting investor optimism about Premier's greater potential for export growth.
Solar Glass Manufacturers Face Mixed Prospects
Borosil Renewables dominates India's solar glass manufacturing sector but faces intense competition from cheap Chinese imports. The company's profitability has fluctuated with changing regulations and import policies. While China's subsidy removal could improve Borosil's competitive position, domestic competition may intensify as other glass manufacturers expand their solar glass operations.
Borosil faces additional challenges with working capital management, where days have increased from 96 in FY24 to 159 in FY25. These factors have kept investor sentiment cautious, with the stock remaining relatively flat since late 2021.
EV Chemical Players Show Promise
Several Indian chemical companies are positioning themselves to benefit from the solar and battery manufacturing ecosystem. Neogen Chemicals has formed a joint venture with Japan's Morita Chemicals to build India's largest lithium hexafluorophosphate manufacturing facility. The company's stock has gained over 15% since China's announcement.
Himadri Speciality Chemical is set to become India's first producer of advanced carbon material for lithium-ion battery anodes through its partnership with Australia's Sicona Battery Technologies. Gujarat Fluorochemicals, as India's only fluoropolymer manufacturer, has also established early mover advantage in battery chemicals.
Challenges and Risks Remain
While the subsidy removal creates opportunities, significant challenges persist. The cost gap in solar cell manufacturing remains substantial, with Indian production costs still significantly higher than China's despite the policy change. This means India's cell manufacturing process still has considerable ground to cover before matching China's scale and pricing.
The increased cost of solar panels could also impact power producers who focus solely on plant construction rather than integrated manufacturing. Companies like NTPC may face higher input costs, while integrated players like Tata Power and Adani Enterprises could benefit from their comprehensive value chain strategies.
Historical precedents from China's removal of rebates on aluminum and copper in December 2024 show price increases of 20-50%, suggesting similar trends could emerge in solar markets. However, the full impact will depend on how quickly Indian manufacturers can scale production and improve cost efficiencies.
The coming years will test India's solar manufacturing capabilities as global market dynamics shift. With proper execution and continued policy support, Indian companies could capture significant market share in the post-subsidy solar landscape.
