Starting from December 1, Indian solar companies may face higher costs for key photovoltaic products, such as solar panels and cells. This is due to a reduction in rebates by the Chinese government, specifically for exports of photovoltaic products.

The rebate has been decreased from 13 percent to 9 percent, which could result in a price increase of 0.02-0.03 yuan per watt for international buyers. According to a report by Citi analyst Pierre Lau, this move is part of China"s strategy to address overcapacity in its solar manufacturing sector. The sector has been experiencing excessive production that exceeds market demand, leading to bankruptcies and consolidations.

Despite a recent oversupply that has caused a decrease in global module prices, benefiting Indian developers with a 25 percent year-on-year decrease in the average cost of large-scale solar projects in the second quarter of 2024, the new rebate changes could reverse these gains and increase project costs for Indian firms.