A reciprocal tariff of 26 percent imposed on India by the United States, is going to slow down India’s solar exports, but the relatively lower tariff compared to other South East Asian solar exporters to the US will also make Indian solar modules and cells cheaper than its competitors, while giving the industry an opportunity to explore alternative global markets, according to stakeholders.
In FY25, India’s exports of solar equipment in totality is expected to be around 7-8 gigawatts (GW), the majority of which went to the US. India’s solar module manufacturing capacity stands at 74 GW, while that of cells is at 25 MW. At 50 GW. The US has lower solar module manufacturing capacity, which means that in the near term it will have to rely on imports to meet its solar capacity addition plan of 739 GW by 2035.
Exports from Malaysia may see a spike
While the US drastically reduced its solar imports from China in the past two years, it started heavily importing modules and cells from Vietnam, Thailand, Malaysia and Cambodia, where Chinese solar firms have set up export hubs.
Despite the re-routing done by China, India will now have an edge over three of the four major countries that import to the US. Against India’s discounted tariff of 26 percent, the US has imposed 49 percent on Cambodia, 46 percent on Vietnam and 36 percent on Thailand, according to the White House annex document updated on April 4 (IST).
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Only Malaysia, where a 24 percent tariff has been imposed, is lower than India and likely to put up stiff competition. “It is quite likely that we may witness an increase in the solar manufacturing capacity in Malaysia. So, this is the time for India to just go all out and expeditiously add scale to the country’s solar manufacturing capacity,” said a senior executive of a leading solar manufacturer.
Ankit Hakhu, Director, Crisil Ratings, said the US will likely continue to rely on imports for which it may prefer Indian manufacturers over Chinese and South-East Asian suppliers.
Margins to take a hit, but ample opportunities
Trump’s tariffs could impact the margins of manufacturers because 20-25 percent of the domestic production is exported (most of it to the US) where sales are more profitable, according to Hakhu. “However, growing domestic demand will absorb some of the likely reduction in export volume,” he said.
For example, all of Tata Power’s 10 GW plant of solar cells (5 GW) and modules (5GW) is consumed within India, according to the company’s CEO Praveer Sinha.
Amit Paithankar, whole-time Director & CEO, Waaree Energies Ltd called the situation an opportunity to boost manufacturing in India and explore alternative global markets. Waaree is India’s biggest exporter of solar modules and cells to the US.
“This gives a chance to Indian solar manufacturers to reassess and strengthen the renewable energy supply chain, without impacting the industry’s strong long-term growth trajectory. It is also important to view this in the broader context of global trade policies and evolving tariff structures. The global demand for solar remains strong, and India continues to play a pivotal role in driving the clean energy transition,” he told Moneycontrol.
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Talking about the impact on Waaree Energies Ltd, he said, their orderbook is robust at Rs 50,000 crore translating to about 26 GW, with firm purchase agreements for the coming 1.5-2 years, which includes items meant for export from India. “The market dynamics will change and surely a new alternative export market will be explored,” he said.
Trump’s move aimed to boost domestic manufacturing, has encouraged Waaree to expand its solar manufacturing plant in the US from the current 1.6 GW to 3.2 GW. “We proactively anticipated potential policy shifts and have built a resilient supply chain to navigate such geopolitical uncertainties. Our dual approach of manufacturing for the US in the US and manufacturing for the world in India- highlights our assurance to optimise supply chains, maximie efficiencies, and deliver world-class solar technology to meet the growing energy needs of our customers,” Paithankar said.
Dumping fear looms
A section of industry stakeholders expressed concerns over dumping from China. In the past, the solar sector has been most vulnerable in this regard forcing the Indian government to put in place tariff and non-tariff barriers.
Like the US, India too continues to rely on solar imports to the tune of about 60 percent, although the percentage has decreased from 80-90 percent in 2021-2022 due to India’s manufacturing push. “Despite solar manufacturing picking up in India, we still have re-routed Chinese modules and cells available in the country at cheaper prices than the indigenous ones. So, developers, who are also manufacturers, are using imported modules and cells for projects, while a lot of the domestic production is being exported since that has better margins,” said a senior executive from a leading solar company.
“The domestic market is also protected by tariffs (existing basic customs duty (BCD) is 20 percent) and non-tariff barriers (of Approved List of Models and Manufacturers since April 2024 and Approved List of Cell Manufacturers from June 2026. The government keeps coming up with new ways to tackle dumping from China. The latest example is the BCD on solar glass,” Hakhu said.
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