India Ranks Third Globally In Renewable Energy Capacity: Morgan Stanley

NEW DELHI -India now ranks third globally in installed renewable energy capacity, but the long-term effectiveness of the renewable transition in strengthening macroeconomic resilience will depend on the country’s success in localizing upstream manufacturing segments such as solar cells, according to a Morgan Stanley report.

Renewable energy has emerged as the central pillar of India’s medium-term strategy to structurally reduce external energy dependence, the Morgan Stanley report said.

Domestic solar module manufacturing capacity has expanded rapidly, supported by Production Linked Incentive (PLI) schemes and customs duties. According to recent data from the Ministry of New and Renewable Energy (MNRE), domestic solar module manufacturing capacity increased from 38 GW in March 2024 to 74 GW in March 2025, while solar cell manufacturing capacity rose from 9 GW to 25 GW during the same period.

“However, in upstream segments, such as solar cells, wafers and polysilicon, India’s renewable deployment remains partly reliant on imported components. In FY2025, India imported approximately 35 million solar modules valued at around $1.6 billion, with an estimated 60-80 per cent of these imports sourced from China,” the Morgan Stanley report said.

The report noted that while the renewable energy transition reduces dependence on fossil fuels, it does not completely eliminate external exposure linked to manufacturing supply chains.

It added that although renewable deployment capacity has scaled up quickly, upstream manufacturing capabilities have not kept pace, leaving a significant portion of the solar ecosystem exposed to external supply chains, particularly from China.

According to the Morgan Stanley report, India’s non-fossil fuel installed power generation capacity crossed 50 per cent of total installed capacity, reaching 262.7 GW in November 2025. Solar energy capacity stood at 132.9 GW, while wind energy capacity reached 54 GW, accounting for the majority of incremental additions.

The report also noted that the government’s 2030 Nationally Determined Contributions (NDC) target calls for 500 GW of non-fossil fuel capacity. India achieved the milestone of 50 per cent non-fossil capacity five years ahead of schedule, supported by utility-scale renewable expansion, distributed generation schemes such as PM Surya Ghar and PM-KUSUM, and continued policy support for grid integration.

“From a macro standpoint, the expansion of renewables directly compresses the import intensity of growth, as every incremental unit of domestic solar and wind reduces the economy’s sensitivity to imported fossil fuels,” the Morgan Stanley report said. (IANS)