US hits Indian solar with 126% tariff after Adani firms exit subsidy probe

In a sweeping trade action, the US Department of Commerce has imposed a steep 126% preliminary tariff on Indian solar imports after two Adani Group companies — Mundra Solar Energy and Mundra Solar PV — withdrew from an anti-subsidy investigation.

According to the preliminary findings, the two firms were designated as “mandatory respondents” in the countervailing duty (CVD) probe. Their failure to submit complete responses and subsequent withdrawal from proceedings triggered the use of “Adverse Facts Available” (AFA) — the toughest penalty methodology deployed by the Commerce Department when companies are deemed non-cooperative.

The February 20 order has resulted in a punitive 125.9–126% duty being applied not just to the two firms but, for now, broadly across Indian exporters not individually investigated.

Toughest penalty invoked

In its findings, the Commerce Department stated that the two Adani subsidiaries “withheld necessary information,” failed to meet deadlines, and “significantly impeded” the investigation by not fully responding to the initial questionnaire.

The department further concluded that the companies shipped solar cells in “massive” quantities within a short span and benefited from multiple Indian government schemes, including the Advance Authorisation/Advance License Program, Duty Free Import Authorization Scheme, Duty Drawback Program, and the Export Promotion of Capital Goods Scheme — all of which are being scrutinized as export-linked subsidies.

A query sent to the Adani Group did not receive a response. A company source indicated the matter was “sub judice.”

China dependency under lens

Beyond domestic subsidy programmes, the US investigation also spotlighted India’s reliance on Chinese inputs. Citing submissions from the petitioner — the Alliance for American Solar Manufacturing and Trade — the report noted that India’s solar manufacturing sector remains heavily dependent on imports from China.

It also flagged what it described as a broader pattern of Chinese investment in overseas solar manufacturing hubs, including Cambodia, Malaysia, Thailand and Vietnam.

A key focus of the probe was “transnational subsidies” — examining whether crucial components such as polysilicon, silicon wafers, silver paste, solar glass, aluminium frames and junction boxes were supplied across borders at below-market rates.

Ajay Srivastava, former trade officer and head of the Global Trade Research Initiative (GTRI), said the case turned sharply punitive after the Adani firms exited the probe in November 2025.

“Other Indian manufacturers like Waaree Energies participated as interested parties. But exporters not individually investigated are currently subject to the same preliminary rate,” he said. “Because many of the examined schemes are tied to export performance, they are particularly vulnerable to countervailing duty findings.”

Srivastava cautioned that even if India redesigns its incentive structures, exporters dependent on Chinese inputs could continue to face CVD exposure.

Investigation timeline revised

The Commerce Department initiated the probe on August 6 last year following a petition from the US solar manufacturers’ coalition.

At the request of the Government of India and the Adani firms, the period of investigation was later revised from January–December 2024 to April 1, 2024, through March 31, 2025, aligning it with India’s fiscal year.

$792.6 million trade at risk

The stakes are significant. Solar imports from India into the US were valued at $792.6 million in 2024 — more than nine times higher than in 2022, according to US data. Between 2021 and 2024, over 90% of India’s solar photovoltaic module exports were shipped to the US, as per India’s Ministry of Commerce.

Ankit Jain, vice-president and co-group head (corporate ratings) at ICRA Limited, said the proposed duties and regulatory uncertainty in the US market could dampen export volumes from India, which stood at around 3 GW last calendar year.

“This could exert pricing pressure on domestic OEMs and impact profitability of solar module manufacturers,” Jain said, warning that if export volumes are diverted to the domestic market, the resulting oversupply could intensify margin stress further.

With a final determination pending, the 126% tariff signals a sharp escalation in US-India trade friction in the fast-growing clean energy sector — and casts a shadow over India’s expanding solar export ambitions.