US slaps solar tariffs, Indian module makers unfazed

Imposing a 126% duty on Indian solar imports by the US has led to declines in solar stocks. Companies like Waaree Energies assert they can adapt with diversified supply chains. 

Tariff trouble in the renewable energy sector sent solar stocks into a tailspin on Wednesday, after the Trump administration imposed a staggering 126% duty on Indian solar cells and modules. However, manufacturers put up a brave face, stating they can navigate the storm with diversified supply chains and reduced US focus. Shares of industry leaders such as Waaree Energies Ltd and Premier Energies Ltd plunged, as investors weighed the risks of losing access to the vast American market.

Meanwhile, the government signalled a hands-off approach, maintaining that the companies can challenge the duties in the US. Shares of Waaree Energies fell the most among solar companies (down 10.47%), followed by Premier Energies Ltd (-6.27%), Vikram Solar (-5.45%), and Emmvee Photovoltaic Power (-2.11%). The benchmark Sensex index ended the session marginally higher. While the solar manufacturers can take legal recourse, the Centre is unlikely to intervene, a top government official indicated.

Once a CVD has been imposed, the companies will have to fight it legally, said Santosh Kumar Sarangi, secretary to the Union ministry of new and renewable energy. "So, our companies will have to challenge that in the appellate forum; but until then, this will continue, this 126% which has been imposed," he said. The Indian government is "not in the picture," Sarangi said, adding embassy support may be, however, provided to the affected parties.

Meanwhile, Waaree Energies said its existing US orderbook would not be affected by the new duty. India's largest solar panel exporter said the duty applies to made-in-India cells, while Waree sources cells from lower-duty regions to make and ship modules to the US. Emmvee Photovoltaic Power Ltd, another domestic solar cell maker, said it was fully insulated from the new duty as it sells exclusively in the domestic market.

“With a strong focus on the Indian market and domestic consumption of its cell output, the company remains insulated from external trade developments of this nature,” the company said in a statement. Premier Energies and Vikram Solar also sell solely in the domestic market. Adani New Industries Ltd has already shifted its focus to the domestic market as a temporary measure weeks before the duties were announced, Mint reported on 11 February.

The US Department of Commerce on Tuesday announced 125.87% preliminary countervailing duty on solar modules manufactured in India, accusing the New Delhi of unfairly subsidizing exports. The world’s prominent solar market also levied similar duties on Indonesia (104.38%) and Laos (80.67%). The US is a rapidly growing solar cell market as it needs more clean electricity to feed its power-hungry data centres, which are handling a surge in demand from artificial intelligence.

It is also a market offering better margins than others. Sehul Bhatt, director at Crisil Intelligence, said the duty will have a negative impact on export-focused manufacturers, since many Indian companies have planned capacity expansion over the next three years. Given the tariff uncertainty, some Indian companies have already strategized capacity expansion outside India, Bhatt said. However, those making modules in India using made-in-India cells will find costs rising by at least 30% compared to those making modules in the US using imported cells, he said.

"Overall, we believe the duties will create volatile trade patterns for exports from India till final determinations of the rates, scheduled in July 2026, forcing the companies to navigate limited market opportunities amid supply addition," Bhatt said. Solar cells, which are just a few centimeters across, are the building blocks of solar panels that measure a few feet across. Manufacturing cells is relatively more complicated than assembling cells into panels.

Waaree Energies, also the country’s top solar exporter, gets a third of its ₹60,000-crore outstanding orderbook from overseas, which is predominantly the US. The US levies duties on solar imports based on where the cells are manufactured, regardless of where the module eventually gets assembled, Waaree executives told investors on Wednesday. The company continues to source cells from countries with the lowest US tariffs.

“Our supply chain has been tied up with 10% (US tariff rate) jurisdictions,” Sonal Srivastava, the chief financial officer of Waaree Energies Ltd, said in an investor call. Srivastava did not name these countries. Meanwhile, Waree uses the cells it makes in India to make panels for local sale. Incidentally, panels containing domestically made cells fetch a premium in India, as New Delhi pushes for domestic manufacturing through policy interventions.

The local manufacturing is in line with the government's ambitious 500GW non-fossil capacity installation target by 2030. Mint recently reported that Indian solar equipment makers including the country’ largest solar module firm Waaree Energies, Adani Solar, Reliance Industries Ltd, ReNew Energy Global plc, Brookfield and PTT backed Avaada Group and Premier Industries are lining up a ₹30,000 crore solar cell play for creating new 50 giga watt (GW) capacity in the next financial year (FY27) to leverage localization norms.

Waree also has 2.6GW a year of solar assembly capacity in the US, which is soon to be ramped up to 4.2GW. This further hedges its operations from the impact of tariffs or countervailing duties. “Overall, given diversified cell sourcing (from countries attracting ~10–15% duties) and local manufacturing support, the duty is unlikely to materially affect the company’s operations or competitiveness in the US market,” said Harshraj Aggarwal, executive vice president-institutional equity research at Yes Securities.

Ankit Jain, vice president & co-group head – corporate ratings, ICRA Ltd said the CVD and the growing regulatory uncertainty in the US are likely to dampen export volumes from India. This may exert pricing pressures on domestic manufacturers, impacting the profitability of module manufacturers, he added. "If these volumes are redirected back to India, it can result in pricing pressure in the Indian market, which is already oversupplied with solar module manufacturing capacity at more than 140GW as on date which is expected to increase to over 165GW by March 2027," Jain said.

The US action followed American companies petitioning trade regulators that cell makers abroad had an unfair advantage due to local manufacturing subsidies. The US Commerce Department levied these interim duties on cells made in these countries to offset the advantage of local subsidies, as per its investigation. The US regulators will publish the final results of their investigations on 6 July 2026.

Separately, US regulators have another ongoing anti-dumping investigation into solar cell makers from India and other countries. The regulators are examining whether Indian companies sold solar cells in the US below cost, hurting American firms.

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