The first part of this series flagged a freshly-minted vulnerability. In 2012, two years before the Modi government came to power, India imported about 11% of its annual coal requirement, about 71% of its oil, and about 22% of natural gas. Thirteen years down the line, India’s import dependency in all three fuels has risen. India imported more coal (18.86%), more crude (88%) and more gas (51%) in 2025.This year, once the US and Israel attacked Iran, these costs of this import dependence came to face India. How did the country get here? As the second part of this series said, over the last 14 years, the Modi government has deepened India’s reliance on imported hydrocarbons like natural gas. This push, however, is just half the story. The government has also hamstrung renewables. For energy independence, the country had coal (polluting), coal gasification (expensive, energy intensive and polluting) and renewables, especially solar and grid storage. Of these, given that renewables are the future, the Modi government had two tasks before it.First, to curb reliance on imported fossil fuels, it had to grow renewables faster.Second, to avoid import dependence, it had to develop an indigenous sector capable of renewables research and development, and manufacturing. That would have flipped India from an, as Modi himself said, an energy importer to an energy exporter.With that as backdrop, here is what happened.§A year after taking charge as prime minister, Narendra Modi announced a dramatic jump in India’s renewable energy ambitions. Junking the National Solar Mission’s target of boosting India’s solar power capacity to 20 GW by 2022, he said his government would hit 100 GW instead.As announcements went, this one was welcome. Twenty GW had been an underwhelming target, far below the rate at which India could add solar power. In addition, by 2021, even as the plummeting cost of solar panels from China pushed domestic solar tariffs to Rs 2 per unit, the sector was running into trouble. That year, investments stood at $2.8 billion, a third of what they were the previous year. The previous year, even as nations like Vietnam added 13 GW of fresh capacity, India had added just 3.2 GW. As growth slowed, solar firms were cutting costs, selling off parts of their business, and even winding down.Some reasons for this drift were well-known. What hamstrung solar generation in India?The rising cost of rural land was making solar parks costlier. The slowdown in the economy – hit first by demonetisation and the Goods and Services Tax, and then by COVID-19 – had depressed demand. The grid’s limited capacity to absorb renewable energy power was a third factor. Of these, the last had to do with India’s discoms. Their finances were a mess. The reasons extended beyond old explanations like power theft, sluggish tariff revisions, and wanton capital expenditure. One. India had opened solar generation to private firms but left discoms’ financial model untouched. Not only did they give free (or cheap) power to farmers and below-poverty-line families and try to recoup these losses through higher tariffs to industrial customers, they also subsidised renewable power producers.The last of these points needs to be understood. Unlike coal-based power plants, solar parks cannot stop producing power. For this reason, they have what is known as a “must run” status. The electrons they produce have to flow into the grid. In other words, when solar generation is high, discoms have to curb electricity purchases from other generators — like coal-fired power plants — to accommodate solar power. To ensure these generators don’t slip into losses either, discoms pay them the fixed cost mentioned in the Power Purchase Agreement or PPA, regardless of whether power was supplied or not.In other words, discoms not only paid Rs 2 per unit for solar power, they also paid Rs 4 or so as fixed cost payments to the non-solar generators which they had on standby. This expenditure, almost a hidden subsidy for solar, could be large. “NTPC’s Kudagi plant makes Rs 4,800 crore a year as just idling cost,” Raman Srikanth, the dean of School of Natural Sciences and Engineering at Bengaluru’s National Institute of Advanced Studies, had told me in 2021. The results were predictable. Cash-strapped, discoms baulked at fresh renewable power contracts and delayed payments to developers. They also attacked rooftop solar. Countries in Europe and elsewhere have been installing panels atop buildings instead of setting up large ground-based solar parks. In India, when industrial clients, tiring of high tariffs, tried to follow suit, discoms made rooftop solar unviable. This slowed India’s solar market further.India’s solar sector also ailed from terrible market design. Anticipating low participation in solar tenders floated by India’s cash-strapped discoms, India’s Ministry for New and Renewable Energy handed tendering to the Solar Energy Corporation of India (SECI). It floats tenders and chooses winners. Thereafter, it takes the winning bids to discoms, asking them to sign PPAs.By 2021, cracks were visible in this arrangement. Not only were solar developers participating in bids without knowing if discoms would sign PPAs, it also meant the rate at which India added solar capacity was not determined by supply (investment coming into the sector) or demand (consumers seeking renewable power) but by discoms’ capacity to pay and the rate at which SECI floated new tenders. “Capital is far in excess of the opportunities,” a senior manager working on renewable investments from financial services giant Macquarie Group’s London office had told me. “Even if India were to double its number of solar tenders, there would be enough demand.” Demand, he had said, shouldn’t come from government targets but from retail customer demand.For all these reasons, when Modi reset India’s solar targets in 2015, hopes grew that these limiting factors would be removed. Take rooftop solar. Before 2015, India’s targets for this segment were unambitious. “Just 10 MW a year,” as a former SECI official had told me in 2021. After Modi’s announcement, that stood at 40 GW by 2022. For this to happen, though, Modi’s government needed to address discoms’ concerns. In addition, the government had its own priorities. It wanted to reduce India’s dependence on Chinese renewable equipment, boost India’s renewable energy capacity to 500 GW by 2030, and hit Net Zero by 2070.If these were the requirements, what followed was an anti-climax. By 2019, as the World Economic Forum noted, India had the lowest solar power tariffs anywhere in the world. That trend extended into 2020 when a 500 MW tender by Gujarat Urja Vikas Nigam landed at a tariff of Rs 1.99/unit.Fast-forward to today and you will see something very different. Belying the global trend, solar panel costs are rising in India. So are solar tariffs. Here is how we got here. Rebooting solar manufacturingThe story of India’s solar manufacturing is best narrated in three acts. In the first, much before China, India’s freshly independent democracy created an indigenous solar sector to meet developmental imperatives like rural electrification. Solar was first discussed in India’s third Five Year Plan (1961-66), around the same time commercial work started globally on photovoltaics. It fell off planners’ radar during 1970-1980 – the fourth and fifth Plans focused on hydel, tidal and geothermal energy – but resurfaced in the sixth Plan. Thereafter, India created both an indigenous solar manufacturing sector as well as developmental applications such as solar cookers, pumps and electrification. Till 2006, when China’s first solar installation – a 1-MW project atop six buildings in Shenzhen – came up, India was far ahead. That year, the country had about 40 solar manufacturers and an installed manufacturing capacity of 4,000 MW.Then came the second Act. The Chinese hoovered up photovoltaic technology from the west, drove costs down through cheap labour, vast scale and state subsidies, and elbowed rival producers out of the market. By 2020, its share in global production of each manufacturing stage of solar panels – polysilicon, ingots, wafers, cells and modules – stood above 80%.In 2020, India saw the start of a third act. In March that year, the Modi government announced its PLI or production-linked incentive scheme for photovoltaic panels. India, it said, would revive domestic solar panel manufacturing – making them not just for the country but also for export to the world.These were ambitious goals. Not only would it be hard to catch up with China, other countries were eyeing these sectors as well. The US had announced the Clean Energy Manufacturing Initiative and the Inflation Reduction Act. Germany had offered €700 million as research grants for firms working on renewable energy. France too announced a $35 billion investment to build “the technological players of tomorrow”.To participate in this industrial battlefield, the government had to arrest India’s declining manufacturing competitiveness as well as bridge the technological gap. Its response took two forms. ALMM (Approved List of Models and Manufacturers) to boost local manufacturing of solar panels.PLI to boost indigenous development of solar panels. This report will focus on ALMM. Part four in this series will look at PLI.Why solar panels got costlier in IndiaAt first glance, Hyner looks like one more company that makes solar modules. And yet, it is anything but commonplace. In fact, it is a part of Sri Sri Ravi Shankar’s Art of Living Foundation..@SriSriTattva and @GREENSTATas have come together with their joint venture HYENR, which will provide clean, green & affordable energy through Green Hydrogen, EVs & other solutions. pic.twitter.com/lj1JHZZvec— Gurudev Sri Sri Ravi Shankar (@Gurudev) February 19, 2023The self-styled godman is not the only newcomer eyeing solar panel manufacturing in India. Take a look at India’s ALMM – a list of state-approved manufacturers whose panels can be used for government-backed projects — and you will find a motley bunch of characters. Ceramic tile-makers from Morbi, bidi manufacturers from Raipur, textile-makers from Surat, cold storage firms from Ahmedabad, refined oil manufacturers from Haryana, conglomerates like Adani, solar park developers like ReNew, and existing manufacturers like Premier Energies and Waaree Solar.The overall numbers are striking. By the middle of 2023, India had over a hundred module manufacturers – up from four or five in 2016. “As many as 34 are setting up manufacturing capacity over 1 GW,” Subrahmanyam Pulipaka of the National Solar Energy Federation of India (NSEFI) had told me in 2024. “Seventy-four plus firms are adding manufacturing capacities up to a GW.” Along the way, India’s solar manufacturing capacity spiked from 10 GW in 2021 to 60 GW in 2023. Yet more capacity was in the works, potentially boosting panel production to 110 GW by 2025-26.Take a cursory look at these numbers and you will conclude that the Modi government’s indigenisation push for solar panels is a success. This boom, however, stands on a weak foundation. Underwritten not by R&D but high import tariffs, it has slowed the rate at which India adds solar capacity.A zero-sum game runs through India’s solar sector. Riding on cheap solar panels from China, developers had pushed solar tariffs down. These imports, however, decimated local solar panel manufacturers. Once the Modi government came to power, given its ‘Make In India’ push, this equation tilted in favour of manufacturers. The government first slapped higher duties on solar panel imports — and then replaced them with more stringent requirements like ALMM.In the media, this was presented as a question of clashing objectives. Should the Modi government seek self-reliance in solar panels — a goal it ignored with natural gas imports — or should it use cheap Chinese panels to decarbonise faster? As this section will show, this framing is incorrect. India met neither objective. Not only did it lose access to cheap panels, it didn’t reap self-reliance either. What India got was profiteering.With ALMM, the government choked solar panel imports. Firms could, however, import cells and assemble them into panels. The idea was one of progressive localisation — with imports of cells, wafers, ingots and polysilicon being slowly curtailed as well. It was a valid approach. China, too, has insisted on local sourcing. To purge its computer network of foreign components, it created the ‘3-5-2 rule’ – firms had to source 30% of their procurement locally in 2019, an additional 50% in 2020, and the remaining 20% in 2021.While rolling this policy out, though, the Modi government neglected to factor in Indian firms’ past response to tariff-backed import substitution — profiteering. As imported panels got costlier by as much as 50%, Indian firms began pricing assembled panels just below imported ones. “The present price of cells in China is around 6 cents… after imposition of 25% of duty, which we have put in place, it comes to 7.5 cents,” wrote former Union minister of power R.K. Singh in file notings accessed by Indian Express in 2024. “The fabrication cost is not more than 7-8 cents. Therefore, the modules should be available for 16 cents; however, the module manufacturers are charging 23-24 cents.” He described this as “excessive profiteering”.Drawn by such margins, neophytes stampeded into the sector. Seeing their margins, other parts of the solar panel value chain — makers of solar glass, firms making the aluminium frames to which panels are clamped, or selling the silver used to solder cells together — began clamouring for protectionism as well. By 2025, India had introduced a Basic Customs Duty on glass too. With that, domestic panel prices rose further. A glut took shape. In response, manufacturers with political links began pushing modules into government schemes like PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan) which aimed to ease solar use in agriculture. A second set tried to sell panels overseas and landed in trouble when markets like the US began cracking down on Chinese supply chains. A third set began competing on price, often at the cost of quality. “When we check the samples, a 550 Wp [Watt-peak, the maximum power a solar panel can make] solar module is giving the rated wattage,” a developer told MercomIndia. “But when we use them in the project, they give less wattage.” The country’s production of high quality modules, as estimated by IEEFA, stands at just 20-22 GW – less than half of the current installed manufacturing capacity of 60 GW.Eventually the consumer will pay. pic.twitter.com/sSae7Ipjv0— Sushant Singh (@SushantSin) July 6, 2026Along the way, India saw a reversal. R.K. Singh’s earlier notings had been written as FY24 drew to a close. A year later, the price of Chinese cells had dropped to 4 cents. With that, as industry tracker Wood Mackenzie reported, the price of Chinese modules slid to 11 cents per watt. “Just 13 years ago, in 2011, panels were selling for about $1.48 a watt and the stretch goal was to reach 50 US cents a watt,” it said. “Now prices in China are closing in on just a fifth of that level.” By 2020, riding on such slashes in panel prices, India’s solar developers had brought solar tariffs down steeply — from ₹18 in 2012 to below ₹2. By 2019, as this article said above, India had the lowest solar tariff in the world. By 2025, between profiteering and uncertain panel quality, tariffs had risen. “The levelised cost of energy for solar PV… (had fallen) to around INR 2/kWh in 2020,” wrote Observer Research Foundation. “More recently, tariffs have stabilised at around INR 2.86/kWh in 2025, reflecting changing cost conditions.”The costs were large. Not only did the widening gap between coal and solar narrow again, the country’s dependence on China remained intact. The only change was that it was now importing cells instead of panels. Decarbonisation slowed as well. As of now, at least 25 GW of solar power projects face delays or uncertainties due to an increase in module prices. The Wire wrote to Pralhad Joshi, India’s union minister for New and Renewable Energy asking why profiteering was not curbed and how the government would ensure India’s solar tariffs would be in line with global ones. This article will be updated when he responds.Modi’s target of 100 GW by 2022 was “exciting and ambitious,” said a solar industry executive. “The local manufacturing sector could have grown like anything. But the raw materials part of the question was not thought through.”Why solar tariffs rose in IndiaALMM, however, is just half the reason solar tariffs are rising in India. There is also corruption. Governments are now wilfully buying expensive power.India caught a glimpse of this rot late in November 2024 when a chargesheet by the US Securities Exchange and Commission (SEC) said “Gautam and Sagar Adani orchestrated a bribery scheme that involved paying or promising to pay the equivalent of hundreds of millions of dollars in bribes to Indian government officials to secure their commitment to purchase energy at above-market rates that would benefit Adani Green and Azure Power”.The Adani Group first denied these allegations and thereafter, paid $18 million in fines to settle the civil lawsuit without, as Adani Green’s filing to the Bombay Stock Exchange said, “admitting or denying” the allegations made in the civil complaint.Other parts of the political economy arraigned in the chargesheet — SECI, state governments, discoms, etc — issued denials as well. Questions, however, persisted. Even though very few firms in India both manufacture panels and generate solar power, why did SECI issue a tender — India’s largest till date — combining the two? It sought 12 GW of solar power supply and 3 GW of solar cell and module manufacturing capacity even though solar manufacturing is not a part of its purview. This insistence kept most developers out of the race. Just three firms participated– Adani Green, Azure Power and Andhra’s Navayuga Group.That was just the start. SECI set the ceiling tariff at Rs 2.93/unit even though two previous manufacturing-linked tenders, priced at Rs 2.75/unit and Rs 2.85/unit, had not generated interest from discoms. It also waived inter-state transmission charges for this specific project and, thereafter, offered 9 GW to Andhra’s Jagan Mohan Reddy government even though the state was energy surplus. For his part, Reddy signed this PPA even though cheaper renewable power was available within Andhra itself. Along the way, his government overrode opposition from the Andhra Pradesh Power Coordination Committee. The list of omissions ran deeper yet. The state’s electricity regulator did not object to the purchase. In effect, not only had poor market design, as described above, remained untouched, fresh deformities had entered the system. India’s politicians and bureaucrats have long known how to extract rents from fossil fuels. Take coal. In the past, they allotted mines to friends and cronies. In oil, petrol pump licenses met a similar fate. The SEC chargesheet now showed politicians have also figured how to extract rents from the renewable energy sector.With that, a third factor began pushing up India’s solar tariffs, dimming both state budgets and decarbonisation. By buying this power, as Business Standard reported, Andhra would end up paying as much as Rs 1,61,000 crore over 25 years. It was, as critics said, unclear it needed this power in the first place. That is just the start. When central and state bodies collude to favour a couple of firms, politically-unconnected investors will stay away. India needs, as we know, as much as Rs 30 lakh crore to hit its renewable energy target of 500 GW by 2030. Global climate aid, however, is limited. The only people with deep pockets in this arena are global and local investors. As BJP leader Jayant Sinha, chair of the Parliamentary Panel of Finance in 2023, told Reuters at the time: “We almost have to double private sector capex in India to be on a net zero trajectory.”But when politically-connected firms win PPAs despite sometimes being uncompetitive, others will hesitate to enter the market. The country reaps lower investments and low participation in tenders, which hampers price discovery (as happened with the manufacturing-linked tender).The Wire asked Joshi why market design for the solar sector has not been fixed. This article will be updated when he responds.EndgameAs this article gets written, solar panels are set to get costlier yet in India.The NDA now wants to extend ALMM into cells. Over time, for true indigenisation, it will have to backwards integrate all the way into polysilicon. Large questions lie here. Few module assemblers have the pockets needed to backwards integrate into cell, ingot, wafer and polysilicon manufacturing. In the short term, ergo, some will turn sick or get acquired. Another possibility, that a handful of larger firms will set up manufacturing lines for cells and ingots and supply to assemblers, will also push up solar panel prices. That is partly because these upcoming manufacturing lines are smaller than their counterparts elsewhere in the world. And partly because India doesn’t have a proportionately large semiconductor sector. “Globally, 60% of polysilicon manufacturing goes into solar cells – and the rest goes into semiconductor chips,” a former solar park developer had told me in 2022. “Polysilicon cannot be set up for only one of these. Manufacturing units get more profits from sales to semiconductor units and volumes from sales to solar units.”A large question lies here. Why did the Modi government bring in the ALMM? It could have used the PLI to develop the country’s indigenous renewable manufacturing sector, used cheap Chinese imports to decarbonise in the meantime, and then, once domestic modules came close to imported panels, hiked import barriers.The assumption here, though, is that PLI would deliver. There, however, the Modi government entrusted firms like the now-tainted Rajesh Exports with the task of helping India catch up with China in renewable technologies. More on that in the concluding part of this series. M. Rajshekhar is an independent reporter who writes on energy, climate change and oligarchy. He is also the author of Despite The State: Why India Lets Its People Down and How They Cope.