Countervailing Duty on Indian Solar Exports
The United States has announced a preliminary countervailing duty (CVD) of 125.87% on Indian solar cells and modules, potentially restricting exports to the U.S. market. This announcement followed an investigation initiated in August, leading to a reduction in shipments by some Indian manufacturers.
Impact on Indian Solar Manufacturers
- The announcement led to a sharp decline in the shares of major Indian solar manufacturers like Waaree Energies, Premier Energies, and Vikram Solar.
- The U.S. Department of Commerce's investigation concluded that producers in India, Indonesia, and Laos benefited from government subsidies, distorting competition in the American market.
- The final determination of these CVD investigations is expected by July 6.
Financial and Strategic Responses
- Vikram Solar maintains a diversified supply chain with a focus on geographies with lower tariff exposure, limiting the direct financial impact.
- Waaree Energies focuses on a diversified sourcing strategy, including investments in Oman and U.S.-based manufacturing. The company plans to expand its U.S. module manufacturing capacity from 2.6 GW to 4.2 GW by the end of the current financial year.
- Premier Energies has significantly reduced its overseas sales to minimize the impact of the higher duties.
Broader Industry and Trade Implications
- Indian solar equipment manufacturers had already started reducing exports post-investigation.
- Trade talks between India and the U.S. might provide clarity, potentially superseding these duties with a new bilateral trade agreement.
- The U.S. was the largest destination for Indian solar exports over the past two years, but exports have declined sharply since June due to tariff impositions and ongoing investigations.
