China’s Solar Price Recovery and Its Ripple Effect on India

China's photovoltaic (PV) industry is emerging from one of its most challenging periods, with polysilicon and wafer prices sending significant recovery signals in July 2024 after being stranded at below cost prices since late 2024. The severe price drops and industry-wide losses has led to coordinated government intervention and supply-side reforms are beginning to stabilise the market and reverse the destructive price competition that has plagued the sector. From a fund to buy out weaker firms, to the outright shut down of smaller tier 2 and 3 level firms, there is a concerted bid to reduce capacity, currently at twice the pevek of global demand, including China itself.   

Polysilicon Leads the Turnaround

The most dramatic recovery has occurred in the polysilicon segment, where prices have surged by 35 percent from their July 2024 lows. The rise is bound to reflect at some stage in end module prices, as polysilicon is where it all starts for a solar panel. 

N-type polysilicon prices rose from approximately RMB 34-37/kg in July 2024 to RMB 43-44/kg by July 2025. This represents the largest weekly increase since 2023, with some weeks registering 22 percent price jumps.

The recovery began accelerating following China's Central Financial and Economic Affairs Commission meeting on July 1, 2025, which called for ‘law-based governance of disorderly and low-price competition’. The polysilicon price increases can be directly linked to high-level government intervention, with the Ministry of Industry and Information Technology (MIIT) emphasising that products must not be sold below production cost.

Silicon Wafer Prices Follow Suit

Silicon wafer prices, which had remained relatively stable since July 2024, began showing recovery momentum in the second half of the year. 

N-type wafer prices experienced a remarkable 22 percent surge in a single week during July 2025, marking the most significant weekly increase since 2023. Mainstream wafer prices recovered from RMB 1.12-1.25/piece in July 2024 to higher levels as supply discipline took hold.

The wafer segment benefited from strict production control maintained by manufacturers throughout the recovery period. With wafer inventory declining to below 16 GW, manufacturers regained substantial pricing power. Most wafer producers operated at 50 percent capacity or lower, with only tier-1 manufacturers maintaining higher utilization rates.

Chinese Government Intervention: Policy Coordination Signals Serious Intent

The Chinese government's approach represents a comprehensive supply-side reform rather than temporary market intervention. Following President Xi Jinping's call to end "disorderly price competition" on July 1, 2025, the Ministry of Industry and Information Technology held a closed-door meeting with 14 leading PV companies including Tongwei, Jinko, Trina, LONGi, and JA Solar.

The government's multi-pronged strategy includes various measures. For instance, the government is employing capacity control, requiring verbal approval from the National Development and Reform Commission for new projects. Production cuts are also being done. Solar glass manufacturers announced 30 percent production cuts starting in July.

Revising its export strategy, the Chines government has been making export policy adjustments as it announced reduction in export tax rebates, from 13 percent to 9 percent for PV products by the end of 2024.

In addition, the industry consolidation in also on cards. As per local media reports, Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan (USD 7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector.

Furthermore, the China Photovoltaic Industry Association (CPIA) established a floor price of RMB 0.68/W for modules in October 2024, with state-owned energy companies pledging to reject bids below this level. This represents a critical shift from the previous race-to-the-bottom pricing that saw module prices fall below RMB 0.62/W - widely considered below production costs.

Implications for India

India has a high dependency on Chinese imports for the growth of its renewable industry. Despite the country's efforts to boost domestic manufacturing, India remains highly dependent on China for PV cells (~55 percent), and module components, particularly polysilicon and wafers, as per a report by Rubix. Module impots are of course dropping fast due to the combined effect of high duties and ALMM.

The rise in the prices of solar components - cells, wafers, etc. - would mean another rising challenge for the Indian renewable industry. India’s renewable sector is already facing big challenges, with close to 50 GW of renewable projects stranded, or failing to find buyers even after winning open tenders from agencies like SECI and others. 

The 50 GW figure has been reported by the Sustainable Projects Developers Association (SPDA). It's a massive number, equal to almost two years of capacity additions if we look at the period post 2023. 

While the problems cited for delays have ranged from delays in critical transmission infrastructure, especially in sun-drenched states such as Rajasthan and Gujarat, other issues linked to land disputes have also played a part. But by far the biggest issue has been buyer's extreme price sensitivity, with many struggling state discoms preferring to wait for lower prices than commit for a 25 year PPA. This refusal to commit has left many developers waiting to start work. A further increase for future projects, should prices rise for input materials like wafers and cells, will amost certainly create a more challenging situation in the country for developers and buyers alike.