US Imposes 126% Tariff on Imported Solar Panels: Industry Stocks Plummet Amid Short-Term Uncertainty

US Imposes Preliminary Countervailing Duties on Solar Cell and Module Imports from India

Key Highlights

• The US has imposed preliminary countervailing duties of up to 126% on solar cell and module imports from India.
• The duties, effective from February 25, are in response to allegations of state-backed incentives in India, Indonesia, and Laos enabling producers to price modules below fair market value.
• Solar manufacturers and related players declined by around 10% on February 25, as investors reacted to the steep headline tariff and rising uncertainty around exports to the US.

Impact Assessment

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• Analysts believe that the direct earnings impact on most companies appears limited, with exposure to domestically manufactured cells exported to the US being minimal.
• SBI Securities' Sunny Agrawal noted that modules made using domestically manufactured cells are not being exported to the US in any meaningful quantity, with exposure of India-made cells exported to the US being around 100 MW.
• Elara Securities' Rupesh Sankhe concurred that exports to the US have already been declining over the past few years, with exports from India to the US coming down sharply.

Market Outlook

• The larger concern is policy uncertainty, which can keep changing and create an overhang in the near term.
• Companies such as Waaree Energies and Premier Energies, which have meaningful US exposure, may shift sourcing strategies if needed.
• US module realizations are about 46 cents per watt compared to around 33 cents in India, making exports from India unviable if duties on India-sourced cells make exports unviable.

Industry Dynamics

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• Exports have already fallen from around 7-8 GW earlier to roughly 3 GW in the first nine months of the fiscal year, according to industry estimates.
• The duties will negatively affect export-focused manufacturers but are unlikely to derail the broader industry.
• Domestically, demand remains robust, with India adding 1.5-2 GW of solar capacity every month.

Recommendation

• Most experts agree that it would be better for investors to wait and watch despite today's correction and possible continued impact over the next few days.
• A few weeks of stability and clearer guidance would help, with the final duty rates scheduled for determination in July 2026.