Why in the News?

In January 2025, the United States withdrew from 66 international organisations, including the International Solar Alliance (ISA), signalling a clear retreat from multilateral climate cooperation. This is important because the U.S. had joined ISA only in late 2021, and its exit goes against the growing need for global climate finance and technology sharing. Although the U.S. contributed only about 1% of ISA’s total funds, its withdrawal raises concerns about global confidence, leadership, and funding for solar projects, especially in Africa and poorer developing countries.

What is the International Solar Alliance (ISA)?

1. Institutional Mandate: Facilitates affordable solar power deployment by reducing project risk, mobilising finance, and accelerating technology adoption.
2. Establishment: Founded in 2015 and headquartered in India as a joint India-France initiative.
3. Membership Base: Covers over 120 countries across Africa, Asia, and island states.
4. Operational Role: Enables access to finance, training, and investor confidence rather than directly building solar plants.

How significant was the U.S. role within the ISA?

1. Limited Financial Contribution: Accounts for only about 1% of ISA’s total funding, limiting direct fiscal impact.
2. Late Entry: Joined the Alliance only in late 2021, indicating limited institutional integration.
3. Ongoing Continuity: Indian officials indicate existing programmes will continue without disruption.

Will India’s solar manufacturing sector be affected?

1. Domestic Manufacturing Strength: India’s solar module manufacturing capacity is projected to reach 144 GW by 2026, up from 25 GW earlier.
2. Import Dependence Decline: India has reduced reliance on imported solar components, particularly from China.
3. Market Share Indicator: Indian manufacturers already supply over 70% of domestic solar module demand.
4. Cost Stability: The U.S. exit does not affect electricity tariffs or domestic solar affordability.

Will investments in India’s solar projects slow down?

1. Domestic Demand Driven: Most solar projects are backed by Indian power demand rather than foreign aid.
2. Contract Stability: Projects operate under long-term contracts with state and central agencies.
3. Investor Confidence: Strong policy continuity and power sector reforms sustain investor interest.
4. Employment Trends: Solar job growth remains strong across manufacturing, installation, and operations.

Where does the real economic risk lie?

1. Regional Impact Concentration: Africa and poorer developing countries face higher vulnerability.
2. Finance Dependence: These regions rely heavily on concessional lending and multilateral climate engagement.
3. Lender Behaviour: Reduced U.S. climate engagement may slow approvals and increase lender caution.
4. Export Exposure: Indian firms executing overseas solar projects may face indirect slowdown.

Does the U.S. exit weaken India’s climate diplomacy?

1. Leadership Continuity: India remains the central driver of ISA’s agenda and operations.
2. Diplomatic Influence: ISA continues to function as a strategic diplomatic tool in the Global South.
3. Responsibility Shift: India now bears greater responsibility for financing mobilisation and leadership.

What lies ahead for solar energy in India?

1. Grid Integration Challenge: Storage, grid stability, and transmission infrastructure remain key bottlenecks.
2. Capital Mobilisation: Attracting affordable finance remains critical amid global fragmentation.
3. Preparedness Indicator: India appears better positioned today than a decade ago to absorb such shocks.

Conclusion

The U.S. withdrawal from the International Solar Alliance does not materially weaken India’s domestic solar sector, which is now driven by strong manufacturing capacity and internal demand. However, it exposes the vulnerability of global climate cooperation, particularly for developing countries dependent on multilateral finance. Going forward, India’s leadership within ISA becomes more critical to sustain solar deployment, mobilise climate finance, and uphold collective action in an increasingly fragmented global climate order.

PYQ Relevance

[UPSC 2021] Explain the purpose of the Green Grid Initiative launched at the World Leader Summit of the COP26 UN Climate change conference in Glasgow in November, 2021. When was this idea first floated in the International Solar Alliance [ISA]?

Linkage: The Green Grid Initiative advances the ISA goal of cross-border renewable energy integration. The U.S. exit highlights India’s continued leadership in sustaining climate multilateralism.

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