US Slaps 126% Duty on Indian Solar Exports, Subsidised Parts From China Under Lens

The US Commerce Department has imposed a preliminary countervailing duty of 125.9% on imports of Solar cells and modules from India.  The duty, announced February 20, 2026, took effect on Tuesday and requires importers to post cash deposits while the investigation continues. A final decision is expected by July 6, 2026.

At this level, the duty could more than double the landed cost of Indian panels. A module priced at $100 could cost roughly $226 after the duty, making many contracts commercially unviable. India exported $1.2 billion worth of solar panels to the US in 2025, an 18% decline from $1.5 billion in 2024.

The case began with a petition filed July 17, 2025. The US International Trade Commission found early evidence that imports were harming domestic producers, allowing the Commerce Department to proceed. Commerce initiated the probe August 6, 2025, issued its preliminary determination February 20, 2026, and will align its final decision with a parallel anti-dumping review in July.

The preliminary duty represents a provisional “all-others” rate, used to calculate cash deposits at the border. Final, firm-specific rates may change once the investigation concludes.

Firms Investigated and Cooperation Issues
US Commerce Department selected two Adani Group companies—Mundra Solar Energy Ltd. and Mundra Solar PV Ltd.—as mandatory respondents. The review period runs from April 1, 2024, to March 31, 2025, aligning with India’s fiscal year.

The case became more punitive after both Adani firms failed to provide complete responses and withdrew from the investigation in November 2025. Commerce responded by applying Adverse Facts Available, the toughest methodology used when authorities determine parties have not cooperated. This approach results in the highest subsidy rates and possible retroactive duties.

Other Indian manufacturers like Waree energies participated as interested parties, but exporters not individually investigated are also currently subject to the same 125.9% preliminary rate.

Commerce examined export-linked and duty-remission programs including Advance Authorization, Duty Free Import Authorization, Duty Draw­back, RoDTEP and the Export Promotion Capital Goods Scheme. Because these benefits are tied to export performance, they are particularly vulnerable to countervailing duty findings.

A significant aspect of the case is Commerce’s focus on transnational subsidies. Investigators examined whether key inputs—such as polysilicon, silicon wafers, silver paste, solar glass, aluminum frames and junction boxes—were supplied across borders at below-market prices.

Commerce sought supplier data, including from China. When foreign governments or suppliers do not provide requested information, authorities may rely on adverse inferences. This broadens the scope of enforcement beyond domestic subsidies. Even if India redesigns its incentive programmes, exporters that rely on Chinese inputs may still face countervailing duties.

Not Alone

The India case follows earlier enforcement actions against Southeast Asian producers that became major solar exporters after US tariffs on China.

Final countervailing duty orders imposed on Vietnam, Thailand, Malaysia and Cambodia took effect April 25, 2025. Vietnam faces duties of roughly 124% for most exporters, rising to about 542% for non-cooperating firms. Thailand’s rates range from about 23% to nearly 800%, Malaysia’s from 17% to 169%, and Cambodia faces some of the steepest penalties, including an “all-others” rate near 534% and extreme rates exceeding 3,400% where companies failed to cooperate.

Import Dependence and Supply Chain Realities

Despite efforts to build domestic capacity, the US still relies heavily on imported solar modules. Imports totaled about $15.2 billion in 2024. Vietnam was the largest supplier, shipping about $5.5 billion, followed by Thailand at $3.1 billion, Malaysia at $2.1 billion, India at $1.5 billion, and Cambodia at $1.4 billion. Together, these countries supplied most panels entering the US market.

China remains dominant upstream global supplier. It controls the most critical and capital-intensive stages of production, including polysilicon, wafers and key components. Vietnam and other Southeast Asian nations serve as downstream assembly hubs, importing Chinese inputs and exporting finished panels to Western markets. US largely restricts imports from China on use of forced labour and other grounds.

Washington’s actions reflect a broader strategy to reduce dependence on China-linked supply chains and support domestic manufacturing. Incentives under the Inflation Reduction Act aim to expand US production of solar components, while tariffs and forced-labor enforcement seek to reshape sourcing patterns.