KPI Green Energy Ltd Management Discussions

Economic Overview

Global Economy

The global economy in 2025, as assessed by the International Monetary Fund (IMF) and the World Bank, is navigating a period of subdued growth and heightened uncertainty. The IMFs April 2025 World Economic Outlook projects global GDP growth at 2.8% for the year, with only a modest recovery to 3.0% anticipated in 2026. The World Banks June 2025 Global Economic Prospects similarly estimates global growth at 2.3% for 2025, highlighting that the current pace is insufficient to drive meaningful development or reduce poverty on a global scale.

This persistent sluggishness is attributed to a convergence of factors, including escalating trade tensions, persistent inflation, weak investment, and demographic headwinds. Trade policy uncertainty has intensified, with tariff rates rising to levels not seen in a century, dampening both trade and investment flows. Inflation remains a concern, with global inflation projected to average 2.9% in 2025, still above prepandemic levels. While advanced economies are expected to return to their inflation targets sooner, many emerging markets and developing economies (EMDEs)

continue to grapple with elevated price pressures. Investment growth has slowed markedly, and productivity improvements are being hampered by structural frictions, particularly in EMDEs. Additionally, demographic shifts, especially rapid population aging, are transforming what was once a demographic dividend into a demographic drag for many countries, further constraining long-term growth prospects.

Regionally, advanced economies are expected to see only modest expansion. The United States is projected to grow by just

1.8% in 2025, while the Euro Area and Japan face similarly subdued outlooks, reflecting the combined impacts of policy uncertainty and ongoing trade disputes. In contrast, EMDEs are forecast to grow at 3.7%, with Asia remaining the primary engine of global expansion. India stands out as the fastest-growing major economy, with growth estimates ranging from 6.2% to 6.7%, while Chinas growth is expected to slow to 4.0% as structural challenges mount. Low- income countries are particularly vulnerable, as growth forecasts have been downgraded and the process of income convergence with advanced economies has stalled, raising concerns about progress on poverty reduction and development.

Risks to the outlook remain firmly skewed to the downside. The IMF and World Bank both caution that further escalation of trade tensions could trigger supply disruptions, financial volatility, and even weaker investment. Renewed inflationary pressures or premature easing of monetary policy could undermine hard-won gains in financial stability. Climate-related shocks and geopolitical tensions add further layers of uncertainty to an already fragile environment.

In response, both institutions emphasize the urgent need for decisive policy action. International cooperation to reduce trade barriers and policy uncertainty could provide an immediate boost to growth, with the World Bank estimating that halving tariffs could raise global growth by 0.2% points over 2025-2026. Structural reforms aimed at enhancing productivity, integrating migrants and refugees, and addressing

skill mismatches are identified as critical for supporting medium- term growth. At the same time, careful calibration of fiscal and monetary policies is necessary to balance inflation control with growth support, rebuild policy buffers, and foster macroeconomic stability, especially as fiscal space remains constrained for many countries.

In summary, the global economy in 2025 is characterized by weak and uneven growth, persistent inflationary pressures, and significant downside risks. The IMF and World Bank warn that without bold and coordinated policy action, both nationally and internationally, the world risks settling into a prolonged period of stagnation, with far-reaching implications for poverty reduction, development, and global stability.

Source: IMF & World Bank

Indian economy

India maintains its position as the fastest-growing major economy amid a global environment of subdued growth and heightened uncertainty. According to the IMF, Indias GDP growth is projected at 6.2% for 2025, a slight downward revision from earlier forecasts but still robust compared to most other large economies. The IMF attributes this resilience to strong domestic demand, particularly private consumption in rural areas, and a favourable demographic profile characterized by a rising working-age population. Indias nominal GDP is forecast to reach approximately $4.19 trillion in 2025, surpassing Japan to become the worlds 4^th-largest economy, a milestone underscoring Indias rapid economic ascent. This

growth projection contrasts with slower expected expansions in other major economies, including China, whose GDP growth forecast has been downgraded to 4.0% for 2025 from 4.6%, and the United States, projected to grow by only

1.8%.

The World Banks Global Economic Prospects (GEP) report from January 2025 echoes this optimistic outlook for India, projecting steady growth of 6.7% in fiscal years 2025-26 and 2026- 27. This rate significantly outpaces the global growth forecast of 2.7% for the same period, highlighting Indias role as a key driver of global economic activity. The World Bank credits Indias growth to a thriving services sector and a revitalized manufacturing base, supported

by ongoing structural reforms, infrastructure investments, and a dynamic domestic market.

The World Bank also notes that Indias economic momentum is underpinned by robust private consumption, especially in rural regions, which has been a critical factor in sustaining growth despite global headwinds such as trade tensions and policy uncertainties.

Both institutions emphasize that Indias macroeconomic fundamentals remain strong. The Reserve Bank of Indias prudent monetary policy has helped maintain inflation at manageable levels, with inflation expected to moderate further in the coming years. Fiscal consolidation efforts are underway, with the government aiming to reduce the public debt-to-GDP ratio gradually, thereby enhancing fiscal sustainability. The IMF highlights that Indias growth is supported by

favourable demographics, with a young and expanding workforce that can sustain consumption and investment over the medium term. This demographic advantage, combined with policy reforms aimed at improving labour market flexibility and financial inclusion, positions India well to maintain its growth trajectory.

Despite the positive outlook, the IMF and World Bank caution that challenges to its growth remain. Global uncertainties, including trade tensions, geopolitical risks, and inflationary pressures, could affect Indias external sector and investment climate. The IMFs reports underline the importance of continued policy calibration to balance growth and inflation, rebuild fiscal and monetary buffers, and address structural constraints that could impede productivity gains. The World Bank stresses that to achieve its long

term ambition of becoming a high- income country by 2047, India will need to accelerate reforms, increase investment rates, and enhance labour force participation and productivity growth.

In conclusion, India stands out in a challenging global economic environment. With projected growth rates above 6%, a favourable demographic profile, and ongoing structural reforms, India is expected to consolidate its position as a major global economic power. However, sustaining this momentum will require careful policy management and continued efforts to address both domestic and external risks. The combination of strong domestic demand, prudent macroeconomic policies, and reform-driven growth sets India apart as a key engine of global economic expansion in 2025 and beyond.

Source: IMF & World Bank

Industry overview

Indias renewable energy sector

As of 2025, Indias renewable energy sector stands as a vital pillar in the countrys ambitious energy transition and climate action framework. With a total installed renewable energy capacity of approximately 217.62 GW, non-fossil fuel-based sources contribute 45.5% of Indias overall power capacity of 466.26 GW. The remarkable growth in renewable energy installed capacity reflects a compound annual growth rate (CAGR) of 15.29% between FY16 and FY25, underscoring the rapid expansion of clean energy infrastructure.

Solar power leads the renewable mix, with over 100 GW installed capacity, accounting for around 21.5% of total power capacity, followed by wind power at about 48 GW, hydro power (both large and small) at roughly 52 GW combined, and bio power contributing around 11.4 GW. The financial year 2024- 2025 witnessed significant capacity additions, with nearly 29.5 GW of renewable energy capacity being added, predominantly from solar (24 GW) and wind (4.15 GW), highlighting Indias accelerating clean energy deployment.

Renewable energy generation has also seen robust growth, with power production from renewable sources excluding hydro increasing from 16.76 Billion Units (BU) in December 2023 to 19.77 BU in December 2024. The cumulative generation from April to December 2024 rose to 189.48 BU, up from 172.48 BU in the previous year, reflecting a growing share of renewables in the electricity mix. Indias peak power demand reached a record 227 GW in the summer of 2025, driven by its large population of approximately 1.4 Billion and rapid economic growth, making it the worlds third-largest energy consumer. Importantly, renewable energy generation is becoming cost- competitive with thermal power, positioning India to expand clean energy capacity significantly between 2025 and 2030.

Indias policy framework is highly ambitious, targeting 500 GW of non-fossil-based electricity generation capacity by 2030, with solar power expected to contribute over 60% of this capacity, approximately 280 GW. The government aims to reduce the carbon intensity of the economy by less than 45% by 2030 and achieve net-zero carbon emissions by 2070. Additionally, India plans for renewables to constitute 50% of cumulative installed electric power capacity by 2030 and to produce 5 Million tonnes of green hydrogen supported by 125 GW of renewable energy capacity. These targets are backed by strong policy measures such as local manufacturing mandates for solar modules, increased tendering of solar, wind, hybrid, and energy storage projects, and incentives including tax rebates and subsidies, all fostering investment and domestic capability development.

Regionally, states like Rajasthan, Gujarat, and Tamil Nadu are leading solar capacity additions, contributing 71% of utility-scale solar installations in 2024. Wind power capacity places India as 4^th globally, with significant potential harnessed along coastal and inland corridors. Hydropower remains an important renewable source, contributing over 50 GW of capacity, especially in the north-eastern states. The sector is also embracing emerging technologies such as hybrid energy systems, round-the-clock power solutions, and green hydrogen production. Currently, over 169 GW of renewable projects are under implementation, with an additional 65 GW tendered, signalling a strong pipeline for future growth.

Investment in Indias renewable energy sector has surged in early 2025, supported by a favourable

policy environment and rising electricity demand. Both private and public sectors are actively participating, with states like Andhra Pradesh launching integrated clean energy policies targeting large-scale renewable and storage capacity. Despite challenges, Indias renewable energy ambitions remain robust, playing a crucial role in enhancing energy security, supporting sustainable development, and positioning the country as a global leader in the clean energy transition. Overall, Indias renewable energy sector in 2025 reflects a dynamic and rapidly evolving landscape, marked by substantial capacity additions, diversified energy sources, and strong commitments to environmental sustainability and economic growth.

Source: IBEF, MNRE

Indias solar energy sector

Indias solar energy sector has emerged as one of the fastest- growing and most dynamic renewable energy markets globally. In 2025, the sector is witnessing unprecedented growth, driven by the countrys immense solar potential, supportive government policies, rapid expansion in manufacturing capabilities, and increasing electricity generation from solar power.

India is endowed with vast solar energy resources, receiving about 5,000 trillion kWh of solar energy annually. Most parts of the country receive solar irradiance ranging between 4 to 7 kWh per square meter per day, making India one of the most favourable countries globally for solar energy generation. This abundant solar resource is a natural advantage,

enabling India to harness solar energy both centrally through large-scale solar parks and in a distributed manner via rooftop and off-grid systems.

The scalability of solar energy is a key strength. Solar power plants can be rapidly deployed with short lead times, unlike conventional power plants that require longer gestation periods. This flexibility allows India to quickly add capacity to meet growing energy demand. Moreover, solar energy is not only useful for electricity generation but also for off-grid and low- temperature applications such as rural heating, cooling, and cooking, which are critical for improving the quality of life in remote and underserved areas.

Remarkable Growth and Capacity Expansion in 2025

Indias solar energy sector has witnessed a historic surge in capacity additions during the financial year 2024-25 (FY25). According to the latest data from the Ministry of New and Renewable Energy (MNRE), Indias cumulative installed solar power capacity surged to approximately 105.65 GW by FY25, up from 81.81 GW in March 2024. This represents the highest annual increase ever recorded in the sector, underscoring the rapid pace of Indias clean energy transition.

During FY25 alone, 23.83 GW of solar capacity was added, a significant jump from 15.03 GW added in the previous year.

This growth reflects strong uptake across both utility-scale and distributed solar markets, highlighting solar energys expanding role in Indias electricity mix.

Expansion of Domestic Solar Manufacturing

A critical driver behind Indias solar capacity growth is the rapid expansion of domestic solar manufacturing. Indias solar module manufacturing capacity nearly doubled from 38 GW in March 2024 to 74 GW by March 2025. Similarly, photovoltaic (PV) cell manufacturing capacity tripled from about 9 GW to 25 GW during the same period.

One of the landmark developments in FY25 was the commissioning of Indias first ingot-wafer manufacturing facility with a capacity of around 2 GW. This facility marks a significant milestone towards vertical integration of the solar supply chain, reducing Indias reliance on imports for critical components and enhancing the competitiveness of domestic solar products.

These manufacturing advancements have been strongly supported by government initiatives such as the Production Linked Incentive (PLI) scheme for high-efficiency solar PV modules. The PLI scheme, with a financial outlay of ^24,000 crore, incentivizes domestic manufacturing by providing financial rewards linked to production volumes and quality standards. This policy has encouraged investments in advanced manufacturing technologies and capacity expansion, positioning India as a global solar manufacturing hub.