China's gradual withdrawal of export subsidies for solar and battery manufacturing could significantly alter global pricing dynamics, narrowing a long-standing cost gap and improving competitiveness for Indian manufacturers, according to Vinay Rustagi, Chief Business Officer at Premier Energies. While the company is in a silent period ahead of its results, Rustagi said the broader industry impact of China's policy shift is becoming clearer.
"For more than a decade, China has tried to dominate global manufacturing in solar, batteries and other products by creating massive overcapacity and artificially keeping prices low," he said. "That has made it extremely difficult for manufacturing to take off in other countries."
Rustagi said the subsidy-driven model has imposed a heavy financial burden on China. "The government has been subsidising local manufacturers who are largely making losses," he said. "The scale of the problem has now become so big and so unsustainable that subsidies are being phased out."
As subsidies recede, Chinese manufacturers are under pressure to raise prices. "The impact of this is that costs of products from China will go up," Rustagi said. "That brings more parity between Chinese and Indian pricing." From an Indian manufacturing standpoint, he described this as a positive shift. "We can now compete more evenly with China — not just in the domestic market, but also in export markets."
Dependence on China Won't End Overnight
Despite the improving outlook, Rustagi acknowledged that Indian solar manufacturing remains reliant on China for upstream inputs such as polysilicon, ingots and wafers, as well as certain core technologies. "The reality is we are still dependent on China for upstream materials and some technology," he said.
However, he pointed to India's policy roadmap for self-sufficiency. "The government has laid out a clear plan, and companies like ours are investing heavily in backward integration to reduce this dependence over time."
Rustagi said global sourcing patterns are also shifting. "It's not just India and the US anymore," he said. "Countries across Europe, Africa, the Middle East and Latin America are actively looking to diversify away from China."
While China retains a structural cost advantage, Rustagi said Indian manufacturers can now compete alongside Chinese players. "The disadvantage we earlier had has shrunk quite significantly."
Policy Support Still Needed
To fully capitalise on China's pullback, Rustagi said further policy support is essential. Priorities include building domestic R&D capability, developing machining and tooling ecosystems, and supporting capital-intensive upstream manufacturing.
"All stages of production are extremely capital-intensive," he said. "There are concerns among investors about viability, so incentive support, especially for upstream capex, would be very useful in the early stages."
Batteries, Imports and the Road Ahead
On battery energy storage systems, Rustagi said the impact would be similar to solar — positive for manufacturers but inflationary for consumers in the short term. "Even if costs rise a little, renewables remain the most attractive source of power compared to thermal, hydro or nuclear," he said.
He also downplayed fears of a rush to front-load imports ahead of China's April 2026 rebate deadline. "These are very expensive items, timelines are short, and imports are usually project-linked," he said. "We don't see any major front-loading of volumes."
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