Xi Jinping's visit to India raises hopes on trade thaw

President Xi Jinping's visit to India has raised hopes that long-standing economic and trade disputes between the two nations could begin to thaw. While China leads global solar equipment production, India has restricted imports of Chinese materials to protect its domestic manufacturing industry. But the policy has instead left some Indian factories facing supply crunch.

Semiconductor wafers being cut in half and fitted with metal electrodes. Then they are bonded together before machines automatically arrange the solar cells and assemble them into solar panels with final quality inspections. This factory in a city on the outskirts of New Delhi can produce about 25,000 solar panels a month.

Around 20% of its semiconductors are sourced from China with the remainder supplied domestically. India plans to require all solar semiconductors to be made domestically from June 2028 with high tariffs slapped on semiconductors imported from China.

However, Reuters previously reported that the policy has led to shortages of semiconductors in India, forcing multiple factories to suspend or cut production.

SUBRAHMANYAM PULIPAKA: "I don't think this is going to be last forever. We are in a position to match our module capacity with cell capacity very soon in the future. We can learn from experiences of China in terms of how to set up factories and scale the factories."

The Indian government also subsidises domestic solar projects, but they must use domestic solar panels. Late last year, China's Ministry of Commerce requested consultations with India at the World Trade Organization, alleging India provided import substitution subsidies in violation of WTO rules.

China has repeatedly stressed Sino-India economic and trade cooperation is fundamentally mutually beneficial and called on India to provide a fair and transparent business environment.