Solar firms eye supply chain shifts and new markets as US duties loom

US plans steep countervailing duties on solar imports from India, prompting module makers to explore alternative markets and new supply chain strategies to mitigate the impact

With a whopping 126 per cent preliminary tariff looming over India’s solar imports by the United States (US), major players may have to look at other markets to offset disruptions. The move could throw a wrench in the ecosystem as India’s module capacity is far higher than domestic installation requirements — the government’s renewable energy drive led to rapid scaling in the solar industry. And, the US is a critical market. 

 

India’s operational module capacity is at 144 gigawatts (Gw) and projected to hit 180 Gw by fiscal 2030 (FY30), while cells are at 23.4 Gw, according to Ministry of New and Renewable Energy (MNRE) data. Annual solar installations may reach 45-50 Gw, compared to module output of 60-65 Gw and moreover cells need to be imported. 

 

Annual US module consumption was 50 Gw and the current data shows yearly module demand of 70-80 Gw for the next few years. The US has a module manufacturing capacity of 50-55 Gw, and it does not have enough cell and wafer capacity. 

 

On February 24, the US Department of Commerce announced a preliminary countervailing duties (CVD) on solar imports from India,  Indonesia and Laos. While Indonesia may face CVD ranging from 86 per cent to 143 per cent, Laos could see levies of 81 per cent. The CVD is contingent upon the country of origin of the solar cells used in modules supplied to the US. In effect, the 126 per cent tariff on India applies only if solar modules supplied to the US use solar cells manufactured in India. A final determination of the rates is scheduled in July 2026.

 

The CVD will have a negative impact on export-focused manufacturers for sure. India exported cells and modules worth ₹34,000 crore to the US between April 2023 and November 2025. The US accounts for over 95 per cent of India’s solar cell and module exports, and the CVD makes modules imported from India more expensive than competing products by at least 30 per cent. But a few Indian companies are planning expansion outside India, which cushions them. The uncertainty will also lead to volatility in this market. 

 

India’s cell manufacturing capacity will reach 27 Gw under ALMM-II (versus module manufacturing capacity of 162 Gw), with some 4 Gw of cell capacity still to ramp up. The mismatch indicates module exports and domestic manufacturing will have to be driven by cell imports.  

 

At a conference call, Waaree Energies (WEL), which earns roughly a third of its revenue from the US, said it does not use solar cells manufactured in India for its US supplies and is, therefore, insulated. Another player, Premier Energies (PEL) has limited exposure to exports, as just 1 per cent of its revenue comes from overseas. 

 

WEL sources cells from countries where the tariffs are 10-15 per cent and then modules are manufactured and shipped from India or manufactured in its US facility, according to the management. Since 2019, the company has been sourcing from non-Chinese sources, though it has not revealed the specific region. The company has stopped sourcing from Indonesia.

 

Hence, WEL’s margins may not be affected, it said. Management stated there has been no material impact on its ability to service its US order book. Capacity is at 2.6 Gw and is expected to reach 4.2 Gw over the next one-two quarters, which will be sufficient to cater to the US order book. There has been no change in capex plans. If necessary, the company may set up a cell manufacturing facility in the US.

 

Two other major players have also issued reassuring advisories. Vikram Solar said there will be limited impact since it sources cells from nations with relatively low US tariffs. EMMVEE Photovoltaic Power has also clarified that CVD will not materially impact business, due to focus on the domestic market. 

 

However, the stock prices of all solar players have been hit by the uncertainty. They will be looking for alternative markets and supply chain strategies to avoid being hit by the CVD.

 

While domestic renewable energy (RE) tendering has slowed in general, with a backlog of 43 Gw of capacity without power purchase agreements (PPAs), battery energy storage systems are up. BESS saw 32.7 Gwh of tenders floated, compared to 15Gwh at the same time last year and 16.0 Gwh awarded, against 3.5Gwh Y-o-Y. This is backed by 30 per cent viability gap funding (VGF) support, 40 per cent lower tariffs for VGF-backed projects, and an 8 per cent decline in battery prices in calendar year 2025. This could present a new set of opportunities.