With the US Department of Commerce imposing a 125.87 per cent duty on imports of solar power equipment from India, the domestic industry has demanded the government should immediately act upon the provision in this year's Budget to allow SEZ units to sell in the domestic market to avoid similar situations.
"The impact on Indian Manufacturers with the new announcement is very limited and the exposure to US as export destination is gradually decreasing as EU and other markets are opening up due to FTA but one key aspect where the govt can quickly act upon is executing the budget announcement of allowing SEZ units to sell in domestic market," said Subramaniam Pulipaka, Chief Executive Officer (CEO), National Solar Energy Federation of India. The move will provide Indian manufacturers with a robust alternative by opening up the vast domestic market, reducing over-reliance on any single export destination.
He also added that the duty is a preliminary finding, with the final determination not expected until July 6, 2026 but the industry is optimistic that if the two governments successfully conclude the proposed bilateral trade deal currently under negotiation, these duties are likely to be superseded by the new agreement, ensuring continued stability for Indian solar exports.
Legal experts point out that the imposition of the countervailing duty on export of solar modules and cells from India is a setback to the domestic industry and could hit exports in the short run. "This could lead to a shift in import sourcing by US energy companies to avoid such significant tariff barriers and will therefore hurt Indian manufacturers. This also could potentially upset the sentiments which generated by announcement of the trade deal between the two nations earlier this month," Manish Mishra, Partner & Haed of Practice - Indirect Tax, at law firm JSA Advocates & Solicitors.
He said Indian solar manufacturers will have to engage in the trade investigation being carried out by the authorities to establish that the proposed duties do not correspond to the subsidies granted to them by the Indian government as has been alleged by the US administration, before the final determination of duties is made sometime in July.
Other legal experts say the duty increase is going to be immediate and will effectively double the landed cost. Also, exporters with firm contracts, letters of credit, or committed shipments are now facing margin collapse, cancellation risk, and potential breach-of-contract disputes. "While the actual duty would be imposed after the final determination, right now there will be a cash deposit collection equivalent to the duty rate. Once confirmed, these cash deposit will convert to actual duty deposit so in a way cash flow impact is immediate," said Shashi Mathews, Partner at law firm CMS INDUSLAW.
She said while an appeal before US Court of International Trade is only possible after final determination, companies could ask for clarifications or exclusions which will be product-specific and will be in the exclusive domain of the Department of Commerce. While the Indian government's role is very limited in this case, India can bring a WTO dispute alleging that the US measures breach Agreement on Subsidies and Countervailing Measures (ASCM) or General Agreement on Tariffs and Trade (GATT) obligations. "India has litigated solar-sector measures at the WTO before. WTO litigation is slower but can lead to binding panel reports and remedies," Mathews said.
The duty imposed by US took effect on 24 February and requires importers to post cash deposits while the investigation continues. "At this level, the duty could more than double the landed cost of Indian panels. A module priced at $100 could cost roughly $226 after the duty, making many contracts commercially unviable," said Ajay Srivastava, Founder of Global Trade Research Initiative (GTRI). India exported $1.2 billion worth of solar panels to the US in calendar year 2025, an 18 per cent decline from $1.5 billion in 2024.
Other experts said with US alone accounting for 98 per cent of the outbound shipments of solar panels and modules from India, the country's exporters are likely to be significantly affected. "Such a high degree of market concentration exposes the sector to considerable vulnerability in the event of trade restrictions. A disruption in access to the US could result in excess supply being redirected to the domestic market, possibly leading to a fall in domestic prices and compressed profit margins," said Prerna Prabhakar, Fellow, Centre for Social and Economic progress (CSEP).
She also emphasized that the Indian government could raise the issue in ongoing trade discussions with the United States, particularly in the context of finalising the bilateral trade arrangement. "Given the high export concentration in the US market, securing predictability or transitional safeguards for Indian solar exporters would be important. Second, the government could reduce customs duties on key inputs used in solar panel and module manufacturing. Lowering input costs would help contain production costs, protect margins, and enhance competitiveness in both domestic and alternative export markets," Prabhakar said.
The case began with a petition filed in July last year when the US International Trade Commission (ITC) found early evidence that imports were harming domestic producers, allowing the Commerce Department to proceed, which initiated a probe in August. A significant aspect of the case is US administration's focus on transnational subsidies. Investigators examined whether key inputs, such as polysilicon, silicon wafers, silver paste, solar glass, aluminum frames and junction boxes, were supplied across borders at below market prices.
 "US solar duty shock may disrupt India's exports, spurs call for SEZ relief")
