India must turn Europe's China problem into its manufacturing moment

This article is authored by Jagjeet Sareen, Asia-Pacific Head, Dalberg Advisors and Anuj Gupta, MD, BowerGroupAsia India.

India's clean-energy transition has quietly become an industrial policy and geoeconomics story. The question is no longer only how many gigawatts we can install, but how much of the equipment behind them can we build ourselves, and with whom. That question has acquired sudden urgency, because the supply chain every clean energy value chain depends on is dangerously narrow. More than half of the solar panels, wind turbines, and lithium-ion batteries that India, the European Union, and the United Kingdom import today come from China. Upstream, in the refining of the minerals these technologies need, the concentration is starker still: China processes roughly 70% of the world's lithium, 78% of its cobalt and 96% of its battery-grade graphite. For economies staking their futures on clean energy, that is an uncomfortable place to stand.

Clean Energy

Europe has noticed, and it is moving. Brussels and London have spent the past two years building the scaffolding of a more self-reliant clean economy, from the Net-Zero Industry Act and the Critical Raw Materials Act to carbon border levies and local-content rules. Their trade figures still show the dependence they are trying to escape: 55% of the EU's clean-technology imports and 57% of the UK's come from China. European capitals are no longer asking whether to reduce that dependence, but how and with whom. That question is India's opening.

Consider where we stand. India has committed to 500 GW of non-fossil power capacity and to electric vehicles reaching 30% of new sales by 2030, with battery demand alone approaching 273 GWh a year. We have built demand and incentives at speed: production-linked incentives across solar, batteries and electrolysers, tariff protection for domestic manufacturers, and a factory push that took centre-stage at this year's Bharat Climate Forum. Indian solar modules already come off the line 30% cheaper than European ones. In batteries, we are scaling lithium-iron-phosphate cells, the chemistry now winning across most uses globally.

Ambition has outrun capability in parts of the value chain, though, and it helps to say so plainly. India imports most of its upstream battery materials and electrolyser components, and lacks scale in advanced grid and high-voltage transmission technology. Much of the precision capital equipment our gigafactories rely on is still bought abroad. And close to 85% of our own clean-technology imports come from the very source we say we want to diversify away from. Incentives alone will not close these gaps at the pace the 2030 timeline demands. India should also resist the temptation to manufacture everything. China's advantage is precisely the breadth and density of its clean-tech ecosystem. India's more realistic opportunity is to identify the parts of the value chain where domestic demand, engineering capability and European demand intersect, and build global-scale positions there. The objective should not be self-sufficiency across every component but start with leadership in strategically chosen segments and components.

This is where Europe becomes useful, and where the relationship can shift from competition to exchange. The most telling number is how little we trade with one another: clean-technology commerce between India, the EU and the UK is less than 1% of what each of us imports. The fit, though, is almost tailor-made. Europe and Britain hold the technology we lack: advanced battery chemistries and separators, next-generation electrolysers, large and offshore wind turbines, and, above all, high-voltage grid equipment. They have the process know-how and capital equipment to lift our factory yields to world-class, and the development finance and export credit to lower the cost of capital for the upstream plants that are hardest to fund at home.

And they offer the one thing no domestic policy can create: demand. The EU and UK face real near-term shortfalls in LFP cells, wind components, green hydrogen and grid equipment, exactly the areas where India can build at scale and at cost. A long-term supply contract with a European buyer changes the economics of an Indian factory overnight, turning a plant built to replace imports into one built to export. That is the whole difference between making things for a protected home market and making them for the world. But the bigger prize is not the factory itself. China's clean-tech advantage comes from the ecosystem around its factories: Specialised suppliers, machinery makers, engineers, processors, testing facilities and logistics networks. If India wants European diversification to create a durable advantage, European partnerships will need to help build that ecosystem in India, not simply finance individual plants.

What lifts this above a think-tank sketch is that the plumbing is finally connected. The India-UK trade agreement came into force in July, and the India-EU free trade agreement, concluded in January, is moving through ratification. Around them sits a lattice of institutions built precisely for this work: the India-EU Trade and Technology Council, the UK-India Technology Security Initiative, the India-Middle East-Europe Economic Corridor and a bilateral critical-minerals partnership. European think tanks, from E3G to the Carnegie Endowment, now name India explicitly as a partner for that shift.

The burden, then, shifts to us, and to how deliberately we play a strong hand. Four moves matter. First, present India as a trusted export hub rather than a walled garden, and chase offtake agreements that underwrite investment before it is sunk. Second, use the new councils and funds to secure real technology transfer and joint ventures, not screwdriver assembly, on terms that leave durable capability behind. Third, treat standards as strategy: meeting Europe's carbon and traceability rules, from CBAM to the battery passport, is less a compliance cost than a passport into premium markets, and the time to build that capacity is now. Fourth, bind our mineral security to Europe's by pooling demand and co-investing in processing, so that neither side merely trades one dependence on another.

None of this is automatic, and the window will not stay open forever. Vietnam, Malaysia, Indonesia and South Korea are courting the same space, and European partnerships and capital will move to whoever is ready first. India spent the past decade proving it could create demand for clean energy. The next will be judged on whether it can supply it, and on the factories, jobs , and know-how it builds along the way. Europe's search for an alternative is the opening, and the next few months are critical to how the EU decides to diversify its supply chains. Whether it becomes India's manufacturing moment depends on how boldly we answer. The signing of the India-EU FTA on 16th Dec 2026 may offer a timely opportunity that leaders on both sides should seize!

(The views expressed are personal)

This article is authored by Jagjeet Sareen, Asia-Pacific Head, Dalberg Advisors and Anuj Gupta, MD, BowerGroupAsia India.