With China dominating every step of the solar energy production chain, governments in India and Europe are looking to reduce their overreliance on a single supplier.In December 2025, Italy awarded more than 1.1 gigawatts of solar capacity across 88 projects in the country's first auction restricted exclusively to projects built without Chinese-manufactured equipment. The winning bids averaged €66.38 ($75.80) per megawatt hour, 17% above the price set in an unrestricted renewable auction held in 2025, according to data from Italy's electricity services agency, GSE. It was a deliberate premium, paid to buy solar hardware from anywhere other than China. But with more than 90% of solar modules installed in the European Union still imported from China , the auction exposed just how thin Europe's alternatives really are. China still produces more than 80% of the world's solar components, dominating every stage of the value chain from polysilicon to finished modules. That scale has delivered affordable panels to the world, but it has also left the governments in Brussels and New Delhi increasingly uneasy about relying so heavily on a single supplier. "China is present in almost every global solar supply chain," Ajay Srivastava, founder of the Global Trade Research Initiative, told DW. Even panels assembled in India or Vietnam, he said, typically rely on Chinese-made cells, wafers or polysilicon further up the chain. India's manufacturing push India's transformation from buyer to builder has been rapid, at least on paper. The country's solar photovoltaic (PV) module manufacturing capacity reached 172 gigawatts (GW) in early 2026, while cell capacity has nearly tripled to 30 GW. This shift has been largely policy-driven. Sanjay Varghese, a senior executive at Indian firm ReNew, credited the government's "Make in India" push — tariffs and non-tariff barriers, such as the Approved List of Models and Manufacturers (ALMM), backed by a roughly $2.5 billion Production-Linked Incentive (PLI) scheme — with reshaping the sector almost overnight. "Five years ago, all solar modules being installed in India were being imported from China," Varghese said. "But today, all modules, and about 50% of the cells being consumed in India, are made in India." Varghese is hopeful that the complete value chain from modules, cells, wafers, ingots, and polysilicon to even metallurgical-grade silicon will become domestic within five to seven years. Dries Acke, CEO of SolarPower Europe, described India's capacity as already outstripping its own demand. "This clearly means that you will have a country looking for export opportunities," Acke said. Where the limits lie But analysts also cautioned against overstating India's readiness to replace China. Jochen Rentsch, head of technology transfer at the Fraunhofer Institute for Solar Energy Systems, pointed to wafers as the critical bottleneck: roughly 99% of the world's photovoltaic wafers are still made in China. He also warned that Chinese manufacturers can price wafers below production cost, making it "nearly impossible" for new entrants to compete on economics alone. While India has become largely self-sufficient in cells and modules, Rentsch added, it remains dependent on China for wafers, polysilicon and manufacturing equipment, suggesting that a shift towards Indian panels would only relocate part of the process rather than eliminate Europe's exposure to China. Varghese acknowledged the same gap from the industry side, noting that India still relies on Chinese firms for the tools and machinery needed to manufacture solar products, and that China continues to lead the world in solar technology development. Europe's policy gap Europe's predicament, however, is different. Germany alone has set a target of sourcing 80% of its electricity from renewables by 2030, a goal that requires enormous volumes of imported clean-energy hardware, much of it still tied to Chinese supply chains. According to BSW-Solar, the German solar association, domestic module production in Germany has shrunk to a small, niche-market operation, though the country retains stronger positions in inverters, mounting systems, battery storage and upstream manufacturing equipment. Acke argued Europe needs its own version of India's PLI scheme, an output-based subsidy, similar in spirit to the US Inflation Reduction Act's tax credits, to make local manufacturing commercially viable. The EU's forthcoming Industrial Accelerator Act, intended to build on the Net Zero Industry Act, 2024, has disappointed advocates like Acke by defining "Made in Europe" broadly enough to include free-trade partners rather than requiring literal European production. To make matters worse, US tariffs on Indian goods have squeezed export prospects elsewhere, pushing Indian manufacturers to look harder at Europe. But Varghese noted that anti-dumping and countervailing duties on Indian-origin cells and modules in the US now exceed 250%, effectively closing that market for now. But India's geographical position does offer some advantages. Rahul Sharan, deputy director and shipping specialist at Drewry, an independent maritime research consultancy, noted that India's west coast ports connect efficiently to Europe via the Suez Canal, potentially shortening delivery times compared with its East Asian rivals. Still, he cautioned that logistics "alone is unlikely to eliminate the structural cost advantages that China has built through scale and integration." Sharan also flagged the Strait of Malacca — through which more than 60% of global maritime trade passes — as a persistent chokepoint whose disruption, whether from South China Sea tensions or US-China rivalry, could ripple through solar supply chains far beyond Asia. A long road ahead While experts argue that, for now, India remains the most credible alternative to China emerging anywhere in solar manufacturing, it is not yet a substitute. Srivastava suggested that genuine manufacturing capability takes 10 to 20 years to build and that incentive schemes like India's PLI often encourage assembly rather than deep manufacturing. He believes the only realistic path is a coordinated "China-plus-one" strategy, with the US, Europe, India and others investing in parallel supply chains even if the output costs 10 to 15% more initially. "At present, however, that political and industrial leadership is missing," Srivastava said. This article is part of the India-Germany Climate and Energy Journalism Programme organized by Clean Energy Wire, supported by Heinrich Böll Stiftung. Edited by: Karl Sexton