Can India shield its solar market from ASEAN dumping?

Domestic demand for solar cells and modules remains limited as the South East Asian region continues to depend heavily on coal and natural gas for electricity generation.

South East Asia accounted for 80% of the US imports of solar cells and modules in 2024. However, from Monday (June 16), the US Customs and Border Protection will begin imposing anti-dumping ranging from 14% to more than 3,500% on imports of solar cells and modules from Thailand, Cambodia, Vietnam and Malaysia. In some cases, these duties are so high that they amount to a de facto ban on ASEAN solar exports to the US.

US Tariffs Reshape Global Solar Trade

Domestic demand for solar cells and modules remains limited as the South East Asian region continues to depend heavily on coal and natural gas for electricity generation. Therefore, these prohibitive anti-dumping and countervailing duties, which will be in addition to any country-specific import tariffs already put in place by the Trump administration, will virtually close the US market for ASEAN exports of solar cells and panels.

Many argue that this opens up a big opportunity for India’s export of solar cells and modules to the US market.

However, they should temper their expectations for two reasons. First, Trump’s tax bill signals a potential rollback of clean energy subsidies, with accelerated expiry of key tax credits and stricter qualification requirements - that is likely to slow clean energy expansion in the US. Second, the US seeks to promote its domestic solar industry. That’s why it’s trying to prevent the rerouting of Chinese solar materials through ASEAN countries by imposing anti-dumping and countervailing duties on these Southeast Asian nations.

China supplies 100% of India’s polysilicon requirements, most of which is produced in the Xinjiang Uyghur Autonomous Region, making them subject to a de facto ban by the US. This forced China to relocate part of its solar manufacturing facilities to the South East Asia region to protect its access to the US market.

India’s Export Hope Faces Hurdles

India’s efforts to localise polysilicon processing have made little progress. Moreover, China currently supplies 50-60% of India’s solar cells, which are then assembled into panels, as domestic supplies remain either too costly or inadequate—much like the situation with ASEAN countries. Given this backdrop, India should seek a temporary relaxation under the India-US BTIA to be allowed to use Chinese inputs and intermediates in its solar panel exports to the US, at least until domestic polysilicon and cell capacity ramps up. Otherwise, India’s export of solar modules and panels to the US will suffer even if it is able to secure a free trade deal with the Trump administration.

Nevertheless, in focusing too much on exports, what is being overlooked is that ASEAN countries, now facing restricted access to the US market, may redirect their solar cell and module exports to India, taking advantage of zero import duties under the ASEAN-India Free Trade Agreement—potentially leading to a surge in imports from the region. However, it is important to note that while the FTA covers customs duties, it does not exempt ASEAN imports from cesses and surcharges such as the Agriculture Infrastructure and Development Cess (AIDC) and Social Welfare Surcharge (SWS) which are still levied on these products.

On April 1, 2022, the government raised the basic customs duties (BCD) on solar cells and modules to 25% and 40%, respectively, to boost domestic solar manufacturing. However, in the Union Budget 2025, these duties were reduced to 20% for both cells and modules. At the same time, an Agriculture Infrastructure and Development Cess (AIDC) of 7.5% on cells and 20% on modules, along with a Social Welfare Surcharge (SWS) of 2.5% and 4% respectively, were imposed.

Risks of ASEAN Redirecting Exports to India

While solar cells and modules from the ASEAN region are allowed by India at 0% import duty, they are subject to AIDC and SWS which are not covered by the FTA. Such preferential imports must conform to the rules of origin i.e. 35% domestic value addition and change in ITC-HS code at 6 digit level. As these cesses and surcharges are not applied to domestically produced cells and modules, further tilting the playing field in favour of Indian manufacturers. Furthermore, to promote domestic manufacturing of solar cells and modules, the government has introduced what is called the Approved List of Manufacturers and Modules (ALMM), which mandates the use of locally produced modules in government solar projects.

To sum up, ASEAN member countries—Cambodia, Malaysia, Thailand, and Vietnam—only escape the basic customs duty of 20% vis-a-vis other foreign suppliers. Secondly, government solar projects are de facto prohibited for them. That puts domestic solar manufacturers at a clear advantage vis-a-vis foreign suppliers, including those from the ASEAN region. Only a sharp depreciation in the currencies of these countries vis-a-vis the Indian rupee and/or an increase in government subsidies to help dispose of surplus output could increase India’s imports of cells and modules from South East Asia.

Vigilance Remains Key

In case of any sudden surge, the government can always rely on anti-dumping and countervailing measures to deal with unfair trade, or safeguards if those imports — even if not dumped or subsidised — are harming or threatening to hurt domestic businesses. In short, India’s solar market is largely shielded from ASEAN dumping due to a combination of cesses, surcharges, ALMM restrictions, and the government’s ability to deploy trade remedies when necessary—but ongoing vigilance is warranted.