Last month, as the world remained preoccupied with the tariff war between the US and China, the Trump administration made a move that is likely to have a cacophonous echo in India; it slapped huge duties on solar cells and modules from Cambodia (3,521 per cent), Malaysia (about 40 per cent), Thailand (about 375 per cent), and Vietnam (about 400 per cent).
To Indian solar manufacturers, this appears to be music more melodious than a Lata Mangeshkar hit — the US market is a Blue Ocean for them. Thanks to the production-linked incentive (PLI) scheme, India today has module and cell manufacturing capacities of 74 GW and 25 GW, respectively (cells go into the manufacture of modules). So, it does look like the lucrative American market is beckoning Indian manufacturers such as Waaree, Gautam Solar, Jackson Solar and Grew Energy.
Or is it?
As some industry folk such as Rishabh Sharma, Head–International Sales, Adani Solar, understand it, the American rules are more nuanced. Since the tariffs are on “cells or cells assembled into modules”, if an Indian company buys cells from any of the tariff-hit countries to make modules in India, their products would attract the same high tariffs.
However, modules made with cells from other countries or India-made cells may have the tariff advantage.
This raises another issue. India has 25 GW of cell capacity. If most of these go into making modules for the US, what’s left for Indian solar developers? After all, with the non-tariff barrier called ‘approved list of models and manufacturers’ (ALMM), Indian solar energy companies cannot import stuff easily
Short-term pain
In the short term, the US tariffs on Southeast Asian solar modules “will definitely create pressure on Indian projects with delivery challenges and an increase in module prices”, observes Pradeep Sharma, Vice President–Procurement, Aditya Birla Renewables, in a LinkedIn post. “However, with significant module manufacturing capacity ramping up in 2025-26, supply pressure is expected to ease, and market should stabilise in long term,” he adds. He surmises that the government may force domestic manufacturers to earmark some capacity for domestic sales.
There is also a view that the Indian manufacturing capacity can serve both domestic and the US markets. “It’s important to note that India’s ALMM already stands at 75 GW — more than double the domestic annual requirement of 30–35 GW,” notes Hardip Singh, COO, Grew Solar, a solar cell and module manufacturer. “With the ALMM expected to cross 100 GW in the next 12 months, there is ample capacity to meet both international demand and India’s renewable energy goals,” Singh told businessline.
There are also whispers that the US could launch an investigation targeting cells and modules from India, Indonesia and Laos — something that Indian solar developers would welcome.
It is an unfolding story, especially with the present US administration not being famous for policy consistency.