As nations around the globe pivot towards cleaner energy solutions, the rivalry between India and China in clean technology is intensifyingChina’s early investments in clean energy technologies and manufacturing have afforded it a significant competitive edgeHowever, India is quickly ramping up its capabilities, with the intent of seizing a prominent position in the international market.

This analysis delves into the current landscape, recognizing the strengths and weaknesses of both countries in the clean technology competition while addressing potential future developments.

China possesses undeniable technological superiority and cost advantages that have cemented its status as a global leader in clean energy manufacturing

The nation’s focused investments in solar photovoltaic (PV) technology, battery technologies, and wind energy solidify its dominant positionOne of China’s key advantages lies in its ability to produce these technologies at a lower cost while maintaining high levels of technical sophistication.

For instance, in the realm of solar PV manufacturing, China controls essential segments of the supply chain, including wafers and polysilicon, both of which are critical to the production of solar panelsSuch control enables China to maintain a competitive edge in pricing and efficiency, much to the detriment of its peers.

According to S&P Global, countries like India are making significant strides, yet China's output and efficiency in manufacturing still outpace most others

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The quality of the clean technology products produced in China has evolved substantially, alleviating prior concernsThis combination of quality and competitive pricing has played a crucial role in propelling Chinese manufacturers to secure increasing market shares, even in intensely competitive sectors such as wind energy.

Wood Mackenzie’s analysis reveals that China presently retains a dominant position in the manufacturing of major clean technologiesThe country captures a whopping 60% of the wind foundation market and an astonishing 97% of the market share in solar PV wafer production.

Moreover, China’s supremacy extends beyond manufacturing; the rapidly increasing sales of electric vehicles (EVs) further highlight its preeminence in this sector, signaling both domestic and international confidence in its clean energy trajectory.

In contrast, India is ramping up its investments in the global clean technology sector

This trend is fueled by its low-cost manufacturing base and governmental supportFor example, the Production Linked Incentive (PLI) scheme has contributed to reducing the manufacturing cost of solar PV by as much as 24%, enhancing India’s competitiveness on the world stage.

The initiative aims to establish manufacturing of key clean energy components, such as solar panels and batteries, which have predominantly seen supply from China until now.

Furthermore, India has been implementing energy efficiency programs for years and has recently introduced a hydrogen policy focused on producing low-carbon hydrogen through electrolyzer manufacturing, oftentimes emulating technologies developed in China.

The investments in clean energy by India have seen a significant surge

In 2023, the country pumped $68 billion into clean energy projects, marking a 40% increase compared to the average levels between 2016 and 2020. Nearly half of this investment was primarily directed towards low-emission power, particularly in solar photovoltaic projects that have gained momentum.

Conversely, investments in fossil fuels grew by 6%, reaching $33 billion as India grapples with soaring fuel demands but aims more so towards its ambitious clean energy goals.

Upon assessing the current scenario, it is evident that India stands on the brink of a clean energy revolutionPrime Minister Narendra Modi has committed to adding 500 gigawatts (GW) of clean energy by 2030, undoubtedly aimed at positioning India as a principal influencer in the realm of renewable energy

Yet the central question remains: how does India plan to achieve this ambitious objective?

The year 2024 appears bright for India, marking a potential turning point for the renewable energy sector, following years of slow developmentSolar panels and wind turbines are being installed at commendable ratesReports indicate that, as of August of this year, the newly added renewable energy capacity reached 18.8 GW, surpassing last year’s total capacity.

According to the International Energy Agency (IEA), India is set to add 34 GW of capacity by the end of the year, with annual growth expected to nearly double, potentially hitting 62 GW by 2030.

On October 14, the Indian power ministry announced a plan aimed at upgrading the grid to accommodate renewable energy expansion by 2032, involving an investment of $109 billion, thus endorsing Prime Minister Modi’s vision of a cleaner India.

India is also reaping benefits from Western nations' attempts to diversify supply chains and reduce dependency on China

The U.Sand the EU have imposed tariffs and trade restrictions on Chinese products, presenting opportunities for Indian manufacturers to enter high-value markets, especially in solar PV.

S&P Global predicts that by 2028, India could emerge as the second-largest solar PV manufacturing region, second only to China, a prospect that showcases the shifting tides in global clean technology.

Industry experts foresee that this rapid expansion may outpace China's growth rates in the latter half of the decade, propelling India to be the world’s fastest-growing clean energy market.

However, does this rosy picture truly reflect reality? The answer may not be so affirmative

Below, we will reveal ongoing challenges.

Nevertheless, India continues to face multiple hurdlesDespite its progress and being one of the fastest-growing economies, Indian manufacturers still rely on imports from China for raw materials such as wafers and polysiliconAs such, India has not yet reached a level of complete self-sufficiency in these areas.

Moreover, as the nation develops, energy demands are significantly increasingBy the year 2050, India’s energy demands are projected to outstrip even those of the rest of the globeThis rising demand could place immense stress on its energy system, which still largely depends on imported fossil fuels such as crude oil and natural gas.

Along with the growing demand, the risk of carbon emissions also looms large, particularly in transportation, power generation, and industrial applications if fossil fuel consumption continues to rise.

S&P Global analysis highlights that India’s progress in wind energy and battery manufacturing has also lagged behind China

While India is expanding battery production, it remains uncertain whether self-sufficiency will be achieved by 2030. In the wind energy sector, the country’s infrastructure is better suited for onshore projects, which presents challenges in competing within the growing offshore wind market.

Trade barriers and risks of global oversupply are significant threats to the expansion of India's clean technologyAs the U.Sand EU focus on re-industrializing away from China, Indian clean technology exports could face new tariffs, particularly in solar PV and battery sectorsThere exists a delicate equilibrium between encouraging global supply chain diversity and protecting domestic Chinese industries.

Additionally, in specific clean technology areas like electrolyzers, global oversupply might challenge India’s manufacturers to maintain competitiveness

Although it is anticipated that India will produce electrolyzers exceeding its own needs by 2030, fierce competition from established enterprises could squash prices, thus constraining growth possibilities in this domain.

Can India compete without China? Reports indicate that China's dominance over global supply chains makes it impractical for India to completely hijack its manufacturing capabilitiesFinance Minister Nirmala Sitharaman has underscored that India may still require Chinese investment and technology to further its manufacturing ambitionsInstead of distancing itself from China, collaborating with its expertise might be key to advancing India’s clean technology sector.

Investigations suggest:

“It may not be the wisest approach to assume that India can fill the void left by China in certain manufacturing sectors

In fact, recent data throws doubts on whether China is genuinely retreating from light industrial manufacturing.”

This assertion is self-evident.

China's predominant position in clean technology is undeniable, yet India is steadfastly working to narrow this gapWith strategic government backing and lower production costs, India holds the potential to emerge as a key supplier of clean technology products for both the U.S and Europe.

According to data from Australia-based Climate Energy Finance (CEF), Chinese firms have invested over $100 billion in overseas clean energy projects since the beginning of 2023 to circumvent tariffs imposed by the U.S