Trump tariffs and Impact on Indian Solar-Cloudy With Silver Linings

As governments across the world and industry coordinate to better understand the impact of the Tariff blow from the US, it is interesting to see how the solar sector in India will be affected. Keep in mind that India has slowly been emerging as a key solar manufacturer after years of efforts to push domestic industry to make in India. Today, the country is probably number 2 in solar module manufacturing at least, and could be on its way to become number 2 overall across the solar supply chain by 2026, if scheduled capacity creation across cells, wafers, ingots and  finally, polysilicon fall into place by 2027-28.

With current module capacity at over 70 GW, and cell capacity at 25 GW and rising fast, it was always apparent that an exports focus would be a key part of plans for Indian manufacturers, considering the ability of the domestic market to absorb a maximum of 45-50 GW annually. The US has been a key destination until now for India’s module exports, accounting for over 90% of exports by some estimates.

What the Trump tariffs have done is put a giant spanner on those plans. Perhaps the only thing worse than the sweeping nature of the tariffs that have lumped India with a hefty 26% tariff, is the sheer disinterest of the Trump administration in the solar sector per se. Or perhaps, the juvenile logic of the way the tariffs have been calculated, which has already been covered by media elsewhere. Lobbying by industry bodies like the SEIA for any sort of relief, is likely to be far less effective with the Trump administration, however.

Not All Gloom For India

The silver lining? The much higher tariff blows on some of India’s key competitors for exports to the US. That certainly does no harm to India’s competitiveness vis a vis these countries.

Tariffs on key Southeast Asian countries, at 46% tariff on Vietnam, 36% on Thailand, 24% on Malaysia and 49% on Cambodia, have hit them harder than India. The extra 34% levy on Chinese imports will not really have that much of an impact as Chinese manufacturers had shifted focus from direct exports to exports through SE Asia in the past two years. These rates, on top of a baseline rate of 10% on all imports will lead to two obvious results. One, the overall cost of solar in the US will go up, possibly impacting some capacity additions planned, or a drop in demand. Second, this will help make domestic producers in the US, especially First Solar more competitive, even as First Solar has a pretty strong (and full) order book to 2026. However, if the creeping apathy towards solar continues, even this could be at risk at some stage, especially its international expansion plan. It currently expects to reach 25 GW of manufacturing capacity, of which 14 GW is expected to be in the after completion of a 3.5 GW facility in Louisiana. The fate of facilities in SE Asia and India will also come into focus now.  We have already covered how its 3.2 GW India facility was counting on exports to the US.

For Indian firms, the factor to worry about will be any further red tape in the name of further scrutiny of origin of key input materials like cells, besides the polysilicon used as US customs has been doing since last year. Manufacturers like Waaree Energies, which is also the largest exporter from India, and just inaugurated its first 1.6 GW manufacturing facility in the US, will be tested to use their experience to make the most of it.

Dr. Amit Paithankar, Whole-time Director & CEO, has issued a statement expressing confidence on the future for Waaree. “The U.S. administration’s move to impose a 26% tariff on Indian imports presents an opportunity 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.
At Waaree, we have proactively anticipated potential policy shifts and have built a resilient supply chain to navigate such geopolitical uncertainties. Currently, we have 13.3 GW of manufacturing capacity in India, which will be expanded to 16.5 GW within the next few months. Simultaneously, our 1.6 GW U.S. manufacturing facility is set to scale up to 3.2 GW. This dual approach- manufacturing for the U.S. in the U.S. and manufacturing for the world in India- highlights our assurance to optimizing supply chains, maximizing efficiencies, and delivering world-class solar technology to meet the growing energy needs of our customers.

While the new tariffs affect U.S. imports from India, several other key suppliers to the U.S. market face even higher tariff barriers, presenting a unique opportunity for India’s renewable energy sector to strengthen its competitive edge.”

Frequently Asked Questions (FAQs) – Related Questions Asked On SolarFaqs

How do the new U.S. tariffs affect Indian solar module exports?

The U.S. has imposed a 27% tariff on Indian solar module imports, potentially reducing their competitiveness in the American market. This could lead to decreased export volumes and revenue for Indian manufacturers.

Are other countries facing similar tariffs on solar modules?

Yes, several Southeast Asian countries face even higher tariffs: Vietnam at 46%, Thailand at 36%, Malaysia at 24%, and Cambodia at 49%. These higher tariffs may shift U.S. demand towards Indian modules despite India’s own tariff.

What impact will these tariffs have on the U.S. solar industry?

The tariffs are likely to increase the overall cost of solar installations in the U.S., potentially slowing down some planned projects and reducing demand. However, they may also make U.S. domestic producers more competitive.

How are Indian solar manufacturers responding to these tariffs?

Indian manufacturers are exploring alternative markets to mitigate the impact of U.S. tariffs. Additionally, some companies are considering establishing manufacturing facilities in the U.S. to bypass import tariffs and remain competitive.

What is the outlook for Indian solar exports amid these tariff changes?

While the tariffs present challenges, India’s relatively lower tariff compared to some Southeast Asian competitors may allow it to retain a portion of the U.S. market. Diversifying export destinations and enhancing domestic capabilities are key strategies for Indian manufacturers moving forward.