Hello, this is Priyanka Salve writing from Mumbai.
Welcome to the latest edition of Inside India. A one-stop-shop for the stories and developments of the world’s fastest growing large economy.
India shares a complex relationship with its neighbor China. Although New Delhi relies heavily on imports from China, it also aims to replace China in manufacturing and investment from Western companies.
But India needs an adequate and reliable power supply to drive manufacturing, encourage local chip and AI companies, and attract data center investment. And here, New Delhi seems too dependent on Beijing.
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big story
This photo taken on November 5, 2025 shows a worker inspecting photovoltaic (PV) cells used in solar panels at an Adani Group factory in the port city of Mundra, Gujarat state. The race for green energy is on.
Shammi Mehra | AFP | Getty Images
New Delhi’s plans to expand its renewable energy footprint and build a self-reliant energy ecosystem are facing a China problem.
Renewable energy capacity in the world’s third largest electricity producer and consumer has increased rapidly over the past decade. Solar and wind farms now account for more than 40% of India’s total power generation capacity, about the same amount as coal-fired power plants, according to data from Niti Aayog, a government think tank.
Experts told CNBC that while green energy is available in India, its supply is unreliable and battery-based energy storage solutions hold the key to solving this problem. But the challenge is that almost 80% of these batteries are made in China, hampering India’s “self-reliance” plans to meet its growing energy needs.
Unsurprisingly, the push for green energy has prevented India from moving away from coal-fired power plants. In the fiscal year ended March 2026, nearly 70% of electricity generated in India was still coal-based, while just over 15% came from solar and wind projects.
dependence on china
India’s Central Electricity Authority last week proposed draft regulations aimed at making it mandatory for all new government solar and wind projects commissioned from July next year onwards to install batteries to store green power and transmit it when needed.
This will improve the reliability of solar and wind energy supplies, but the absence of local battery manufacturers will further deepen India’s dependence on China.
Wood Mackenzie said India’s domestic battery manufacturing currently accounts for less than 1% of its estimated 260 gigawatt-hour demand pipeline under competitive bidding in 2026.
Nearly 80% of the batteries used to store renewable electricity come from China, and 20% from other Asian countries such as South Korea and Taiwan.
This is a “decisive advantage” that China has over India, and in the past Beijing has used access to critical resources and technology as a “geopolitical lever” to forge better trade deals, Wood Mackenzie director Ankita Chauhan told CNBC.
Relations between the two countries have improved over the past year following talks between Prime Minister Modi and Chinese President Xi Jinping in Tianjin last year. However, the issues between the two countries are far from resolved. Local media reports say Indian businessmen and executives are facing “significant difficulties” in obtaining visas for China.
While India has eased investment restrictions on Chinese companies, it has also imposed some trade restrictions on goods in sectors where India is close to self-sufficient. Meanwhile, China is wary of technology transfers to India, saying it could undermine Beijing’s role in key global supply chains.
For example, India has already emerged as a major supplier of Apple’s smartphones since the company started diversifying its manufacturing base away from China. But India needs an adequate and reliable power supply to drive its manufacturing program, promote local chip and AI champions, and attract data center demand.
“Energy security is the need of the hour,” Indian Prime Minister Narendra Modi said in his Independence Day speech last month. “It is becoming increasingly difficult to run the new world without energy,” Modi said, emphasizing that manufacturing chips, AI and data centers requires huge amounts of electricity.
Although increasing India’s alternative energy production is one of the key achievements of the Modi government, its role in strengthening India’s energy security is limited. Ray Tay, executive director of project and infrastructure finance at Moody’s Ratings, told CNBC that solar and wind energy storage is “becoming increasingly important.”
“Solar and wind availability varies by time of day, weather and season, and peaks in resource availability usually do not coincide with peaks in demand,” Tay explained. Storage helps shift excess generation to peak times.
It can also improve the credit profile of renewable energy producers by stabilizing revenues and “reducing energy curtailment risks,” Tay said. In India, curtailment risk refers to situations where renewable power plants are forced to reduce their generation to meet the grid’s capacity to safely absorb or transmit power.
Experts say renewable power plants are easier to scale back than thermal power plants, which need to function at a critical level.
Local manufacturing
According to a report by Wood Mackenzie, it could take more than a decade for India to build up local battery manufacturing capacity. Experts say most Indian companies are currently investing in setting up downstream assembly and testing facilities or in making mobility batteries, which are more lucrative given government subsidies.
Ashish Singla, director of South Asia power and renewables research at S&P Global Energy, told CNBC that China controls more than 80% of global manufacturing capacity across several key battery supply chain components, exposing India to price volatility, trade restrictions and technology concentration risks.
But he expects that if implementation goes well, critical minerals initiatives and recycling policies are successful, India’s local battery manufacturing capacity “could reach around 140 GWh.”
need to know
India’s June quarter GDP statistics spark controversy
India’s better-than-expected economic growth of 7.8% in the June quarter has come under scrutiny, with former government officials claiming the numbers were artificially inflated by compressing the previous year’s numbers.
India’s largest stock exchange National Stock Exchange receives regulatory nod to launch IPO
National Stock Exchange, India’s largest stock exchange, on Friday received IPO approval from the Securities and Exchange Board of India. The stock exchange plans to launch the IPO in the week starting September 21, which could value the company at up to $47 billion, according to Reuters.
very soon
September 12-13: India hosts BRICS Summit in New Delhi
September 14: India CPI and WPI inflation data for August
