US slaps 126% tariffs after Adani firms exit case, jolting India’s solar exporters and supply chains

The United States Department of Commerce has proposed imposing tariffs of about 126 per cent on certain solar products from India, following the withdrawal of two Adani Group firms — Mundra Solar Energy and Mundra Solar PV — from an ongoing subsidy investigation. According to a preliminary report, their exit from the proceedings led to the application of “Adverse Facts Available” (AFA), a stringent measure used when respondents fail to cooperate, resulting in steep provisional duties on the sector.

The two companies had been designated as mandatory respondents in the probe. Their failure to submit required information within prescribed deadlines and their partial or complete non-response to the department’s questionnaire were cited as reasons for the punitive methodology. Under AFA, investigators are permitted to rely on the harshest assumptions when calculating subsidy margins. Industry sources indicated the matter is currently under legal consideration, and the companies have not issued a public response.

The Commerce Department’s preliminary findings allege that the firms exported large volumes of solar cells to the United States within a short timeframe while benefiting from multiple Indian government incentive schemes. These include the Advance Authorisation programme, Duty Free Import Authorisation, Duty Drawback, and the Export Promotion of Capital Goods scheme. Such programmes, when tied to export performance, often attract scrutiny under countervailing duty rules.

The investigation also highlights Washington’s concerns over the Indian solar industry’s reliance on Chinese inputs. The report notes that key components and investments linked to China mirror patterns seen in other Asian manufacturing hubs such as Cambodia, Malaysia, Thailand, and Vietnam. This dependence, US authorities argue, complicates efforts to ensure fair competition and raises questions about transnational subsidies embedded in supply chains.

Trade experts say the case became more severe after the Adani firms withdrew from the probe in late 2025. While other Indian manufacturers, including Waaree Energies, participated as interested parties, exporters not individually examined may still face the same preliminary duty rate. Analysts warn that export-linked incentives — including RoDTEP and duty remission schemes — remain vulnerable to countervailing action if they are deemed to provide unfair advantages.

The countervailing duty investigation was initiated in August last year after a petition by the Alliance for American Solar Manufacturing and Trade, a coalition representing US solar producers. At the request of the Indian government and the companies involved, the investigation period was revised to align with India’s fiscal year, covering April 2024 through March 2025 instead of the 2024 calendar year.

A key focus of the inquiry is whether critical inputs such as polysilicon, wafers, solar glass, aluminium frames, and junction boxes were sourced at below-market rates across borders. Experts caution that even if India modifies its domestic incentive structure, manufacturers relying heavily on imported Chinese components could continue to face countervailing duties.

The US market has become crucial for India’s solar exports. Imports from India were valued at nearly $793 million in 2024, more than nine times higher than in 2022. Government data show that over 90 per cent of India’s solar photovoltaic module exports between 2021 and 2024 were destined for the United States. This concentration heightens the sector’s vulnerability to regulatory shifts in Washington.

Ratings agencies warn that the proposed duties and policy uncertainty could reduce export volumes from India, which were estimated at around 3 gigawatts last year. If shipments are redirected to the domestic market, increased supply could put downward pressure on prices, affecting margins for local manufacturers. The episode underscores the fragile balance between export-led growth and the geopolitical risks shaping global clean energy supply chains.