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The recent imposition of steep tariffs by the United States on Indian goods, including renewable energy components, is expected to have a significant and multi-faceted impact on India’s renewable energy sector. While posing immediate challenges to exporters, some experts also view it as a potential “blessing in disguise” for the long-term growth of the domestic industry.
1. Challenges and Immediate Impacts
Loss of Export Competitiveness – The U.S. has imposed a 25% tariff on Indian goods, with an additional 25% set to take effect (from 27 August), bringing the total duty to 50%. This makes Indian solar panels and other components significantly more expensive in the U.S. market, eroding their cost advantage and making them less competitive compared to products from countries with lower tariffs like Vietnam and Indonesia.
Reduced Export Volumes – The U.S. is a major destination for India’s renewable energy exports, particularly solar modules. In 2024, the U.S. accounted for nearly 99% of India’s solar module exports. The high tariffs are expected to make these exports economically unviable, leading to a sharp decline in trade volumes.
India’s exports to USA in solar modules & Cells was USD 544,300 & USD 16 in 2022; USD 1,758,011 & USD 28,127 in 2023; USD 1,477,732 & USD 31,002 in 2024
Anti-Dumping and Countervailing Duty Investigations – The U.S. has also initiated anti-dumping and countervailing duty investigations against solar cell imports from India, in addition to the general tariffs. If new duties are implemented as a result of these probes, it would further strain Indian exporters and could effectively shut them out of the U.S. market.
Investment Uncertainty – The escalating trade tensions and the possibility of further policy changes are creating a cloud of uncertainty for companies in the renewable sector. This could delay or deter planned investments, including those by Indian firms looking to set up manufacturing facilities in the U.S.
2. Opportunities and Potential “Blessings in Disguise”
To reduce reliance on a single export destination—especially the US—India must put diversification at the heart of its trade strategy. This means striking stronger deals with fast-growing economies and backing exporters with the right incentives. In renewable energy, for instance, India’s proven edge in solar PV and energy-efficiency solutions positions it well to capture global demand. Such targeted outreach will not only unlock new growth opportunities but also safeguard India’s trade against concentrated market risks.
Focus on the Domestic Market – With export markets becoming less viable, Indian manufacturers of solar cells, modules, and wind turbines are being compelled to shift their focus to the burgeoning domestic market. This could lead to a significant boost in local production and deployment. Already many manufacturers are setting up manufacturing facilities, and Indian Govt Policies are also in favour of domestic manufacturer Scaling Up and Cost Reduction – By concentrating on the domestic market, Indian manufacturers can achieve greater economies of scale. This increased scale of production, coupled with government incentives to encourage local manufacturing, could lead to a reduction in production costs over time, making the industry more mature and globally competitive in the long run.
Strengthening Domestic Supply Chains – The tariff barriers may encourage India to strengthen its own renewable energy supply chains, from raw materials to finished products. This would reduce reliance on imports and make the country’s energy transition more resilient to external shocks.
Diversification of Export Markets -The tariffs are also prompting Indian exporters to actively seek out new markets for their products in regions such as Europe, Africa, and the Middle East.
While this will require a significant effort, it could ultimately lead to a more diversified and stable export base for the Indian renewable energy sector. Indais’s exports to world in solar modules & cells was USD 571,602 & USD 1,090 in Year 2022, in 2023 was USD 1,786,991 & USD 48,054 , in 2024 was USD 1,511,350 & USD 35,376
Vipin Tiwari, Corporate Strategy Manager, AXITEC Energy India Pvt. Ltd, leading solar module manufacturer
