US-China trade war opens opportunities for Indian solar equipment makers
The US-China tariff war offers Indian solar power developers a small window of opportunity to lower module costs as also gives exporters a slight advantage in maintaining their export levels to the North American country.
Government officials, industry and analysts say the situation is fluid but it is clear that there will be “some sort of isolation” for China, which may benefit India’s manufacturing sector, albeit marginally.
Indian solar equipment maker’s high reliance on China and import of raw materials by the latter from India are among key issues that could rile domestic supply chain ecosystem adversely impacting the upcoming sector.
See-sawing opportunities
On dumping, ICRA Co-Group Head Vikram V said India has the ALMM (Approved List of Models and Manufacturers) policy for modules thereby restricting imports for utility scale and open access projects.
The country largely imports cells, but global PV solar cell prices are already at an all-time low of $3-4 cents per watt and are unlikely to see any meaningful reduction because of the latest events. For solar power developers, this is a neutral event, he added.
Major module exporting countries to the US are Vietnam, Malaysia, Thailand and Cambodia, followed by India. As per the notified tariff rates before the 90-day pause, tariffs on these countries were higher than India, except for Malaysia, which could have possibly improved competitiveness of Indian OEMs, he explained.
“However, with the pause in place on these tariffs now and a 10 per cent tariff on all countries excluding China, this would be a neutral event for domestic solar manufacturers,” Vikram added.
Rubix Data Sciences, a risk management services provider, told businessline that China’s share in India’s solar module imports decreased from 93 per cent in FY23 to 65 per cent in FY24, but dependency on Chinese PV cells increased, with imports rising from 44 per cent to 56 per cent.
Mohan Ramaswamy, Co-Founder and CEO of Rubix Data Sciences, emphasised that India’s solar sector, which relies on Chinese imports for over 50 per cent of its needs, faces a critical inflection point.
Supply chain challenges
This growing reliance is particularly concerning, said Ramaswamy as China holds significant overcapacity, especially in TOPCon (Tunnel Oxide Passivated Contact) modules, a next-generation solar technology.
“If Chinese suppliers begin offering these advanced modules at ultra-low prices, Indian manufacturers—most of whom still produce p-type mono PERC (Passivated Emitter and Rear Cell) modules—could be severely undercut,” he added.
Indian project developers, who prioritise achieving the lowest Levelized Cost of Energy (LCOE), may be incentivised to opt for these cheaper, higher-efficiency Chinese imports, reversing recent gains in domestic manufacturing, Ramaswamy feared.
Further complicating the scenario, he pointed out that the Budget FY25 reduced customs duty on solar cells from 25 per cent to 20 per cent and on modules from 40 per cent to 20 per cent, aiming to strike a balance between lowering project costs and supporting local industry.
“However, if dumping intensifies, government may need to resort to anti-dumping duties, tighten the ALMM regulations, or offer enhanced subsidies and protections to domestic players,” he opined.
“Pressure is also mounting from upstream producers that are involved in making polysilicon, ingots, and wafers, which form the foundational inputs for solar panels. At a high-level meeting with the Ministry of Renewable Energy on March 1, 2025, industry stakeholders pushed for a Safeguard Duty (SGD) on Chinese raw material imports, highlighting that similar levies in the past helped India gain a foothold in module and panel manufacturing,” Ramaswamy said.
Published on April 10, 2025
