US’ 126% levy eclipses key market for Indian solar gear companies

New Delhi: The US announced a preliminary countervailing duty (CVD) of 125.87% on Indian solar cells and modules that’s expected to further limit exports to the key market, although some manufacturers had already begun reducing shipments after an investigation was initiated in August.

Shares of major Indian solar manufacturers such as Waaree Energies, Premier Energies and Vikram Solar fell sharply on the bourses as investors priced in potential export headwinds.

The US Department of Commerce announced, on February 24, preliminary affirmative determinations in its CVD investigations into crystalline silicon photovoltaic cells and modules from India, Indonesia and Laos, concluding that producers in these countries benefited from government subsidies that allegedly distorted competition in the US market.

The final determination in these CVD investigations is scheduled to be issued on July 6. Solar imports from India in 2024 were valued at $792.6 million, more than nine times the value in 2022, it said. These duties are separate from the Donald Trump administration’s sweeping global tariffs, which the US Supreme Court struck down last week and which have since been set at 10%.

Lower Shipments Since August

They have since been set at 10%, though Trump has threatened to raise them to 15%.

Vikram Solar said it operates with a diversified supply chain for the US market, including sourcing from geographies with lower tariff exposure, so the direct financial impact is limited.
Waaree Energies also said it has a diversified sourcing strategy, including investments in Oman for traceable, non-Chinese polysilicon supplies, apart from US-based manufacturing, as part of a long-term strategy to support localised production. The company has an aggregate US module manufacturing capacity of 2.6 GW and is in the process of expanding it to 4.2 GW by the end of the current financial year. “At this stage, the company does not anticipate any material adverse impact on its ability to service its US order book,” Waaree said.Indian solar equipment manufacturing companies had started lowering exports after the US investigation was announced in August, experts said.

Premier Energies, one of the top exporters, said it had reduced the share of overseas sales to almost nil and there will be no impact of higher duties. “The US policy has been moving steadily to ban all imports, and this investigation was announced in August,” it said. “The Indian manufacturers have had a long time to refine our sales strategy and business models.”

Eye on Deal

The Indian solar industry expects trade talks between the two countries to provide clarity.

“We remain optimistic that if the government of India and the US administration successfully conclude the proposed bilateral trade deal currently under negotiation, these duties are likely to be superseded by the new agreement, ensuring continued stability for Indian solar exports,” said Subrahmanyam Pulipaka, chief executive of National Solar Energy Federation of India.

Analysts highlighted restricted access to the US, which was the largest destination for Indian solar exports over the past two years. Since June, Indian solar cell exports to the US have fallen sharply. Shipment of modules has plunged since October because of tariff imposition and on account of the investigations. Module exports had risen for a few months before October in anticipation of the US’ tariff.

“The duty rate is based on facts available with adverse inferences. This suggests that the information is provided by the petitioner,” said a trade expert. An unfavourable ruling will be a setback to India’s production linked incentive (PLI) scheme for solar photo-voltaic modules, the person said.

Experts said ‘adverse facts available’ is the toughest methodology, applied when authorities determine that parties have not cooperated. This approach results in the highest subsidy rates and possible retroactive duties. “The action reflects Washington’s broader strategy to reduce China-linked supply chain dependence and boost domestic solar manufacturing,” said Ajay Srivastava, founder of think-tank GTRI.

Those affected will have time to offer responses to preliminary findings before the US makes a final determination.

The US is also conducting an anti-dumping probe against these products imported from the three countries.

In both anti-dumping and countervailing duty probes, after issuing a preliminary determination, the law requires the US Department of Commerce to verify information submitted by the foreign producers and governments. This department uses this process to validate information submitted by them. It issues a report summarising the findings on completion of the verification.

While some of these companies are banking on rising domestic demand, there is concern over increasing domestic manufacturing capacity and the need to find alternative markets.

According to NSEFI’s Pulipaka, the government has already initiated the process of allowing solar manufacturing units located in special economic zones to sell their products in domestic tariff areas. This is to provide Indian manufacturers with an alternative and reduce over-reliance on any single export destination, he said.

Vikram Solar also said its growth strategy continues to be firmly anchored in India, where demand remains structurally strong.

Countries such as China, Malaysia, Cambodia, Thailand and Vietnam already face duties on solar exports to the US.