What Happened
- The United States Department of Commerce on 20 February 2026 announced a preliminary Countervailing Duty (CVD) of 125.87% on solar cells and modules imported from India, following a finding that Indian manufacturers benefited from actionable government subsidies.
- The Adani Group's Mundra Solar Energy and Mundra Solar PV were designated as "mandatory respondents" in the investigation but withdrew from the probe rather than cooperating with data requests. This triggered the "Adverse Facts Available" (AFA) methodology — the most severe penalty applied when a respondent refuses to cooperate.
- The investigation was initiated on 6 August 2025 following a petition by the Alliance for American Solar Manufacturing and Trade, whose members include First Solar, Mission Solar Energy, and Hanwha Qcells.
- The probe also covers Indonesia (preliminary CVD: 104.38%) and Laos (80.67%).
- Combined solar imports from India, Indonesia, and Laos totalled approximately $4.5 billion in 2025, representing nearly two-thirds of all US solar imports.
- The final CVD determination is scheduled for 6 July 2026, after which tariffs become definitive rather than preliminary.
Static Topic Bridges
Countervailing Duties (CVD) — Trade Law Framework
Countervailing duties are trade remedies applied by an importing country to neutralise the competitive advantage conferred by government subsidies on foreign exports. They are governed by the WTO Agreement on Subsidies and Countervailing Measures (ASCM).
- CVD investigations in the US are conducted jointly by two agencies: the Department of Commerce (DoC) investigates whether subsidies exist and calculates their magnitude; the International Trade Commission (ITC) independently determines whether US domestic industry suffers material injury
- ASCM categorises subsidies as: prohibited (export subsidies and import-substitution subsidies) and actionable (contingent on domestic industry injury)
- Adverse Facts Available (AFA): When a mandatory respondent fails to cooperate, the investigating authority uses the highest available data — typically the most adverse rate found in the investigation — as a penalty rate
- CVD measures must be reviewed every five years under a "sunset review" and terminated if injury is no longer found
- India and the US are both WTO members; CVD measures can be challenged through WTO Dispute Settlement panels
- The WTO Dispute Settlement Body has previously ruled against certain US CVD practices as excessive
Connection to this news: Adani's withdrawal from the probe is the direct reason for the 126% rate — this is the AFA penalty, not a calculated subsidy rate. Had Adani cooperated, the rate would have been based on actual subsidy calculations, likely significantly lower.
India's Solar Manufacturing — Policy and Strategic Context
India has invested heavily in domestic solar manufacturing as part of its clean energy transition. The Production-Linked Incentive (PLI) Scheme for Solar PV Modules under the National Programme on High Efficiency Solar PV Modules was launched precisely to build manufacturing capacity.
- PLI Scheme (Solar): Announced in Budget 2021-22; total outlay ₹24,000 crore; targets 65 GW of integrated solar manufacturing capacity
- Adani Solar (Mundra facility): One of India's largest solar cell and module manufacturers; capacity expanded to ~4 GW annually
- India's solar capacity addition target: 500 GW renewable energy by 2030; solar component ~300 GW
- India's solar module exports to US (2024-25): Estimated at over $2 billion, making the US the largest export destination
- Basic Customs Duty on imported solar cells/modules in India: 25% (cells) and 40% (modules) — India's own protectionist policy to support domestic manufacturers
- Approved Models and Manufacturers (ALMM) list: India's domestic procurement preference list for government tenders, favouring Indian-made panels
Connection to this news: The 126% US tariff effectively shuts out Indian solar exports from the US market. This is paradoxical — India subsidises domestic solar manufacturing (which triggered the CVD probe) to achieve its 500 GW target, but the same subsidies have now made Indian panels uncompetitive in export markets.
US Solar Trade Policy and the "America First" Energy Agenda
The US has progressively tightened solar import rules since the early 2010s, driven by domestic manufacturers lobbying to protect against Chinese, and later Southeast Asian, supply chain dominance.
- 2012: First US CVD and anti-dumping duties imposed on Chinese solar imports
- 2022: Inflation Reduction Act (IRA) — $369 billion in clean energy incentives, with domestic content requirements driving demand for US-made panels
- 2024: Auxin Solar petition led to retroactive duties on solar imports routed through Southeast Asia from China (Cambodia, Malaysia, Thailand, Vietnam)
- 2025-26: New CVD probe extending to India, Indonesia, and Laos — the next tier of alternative supply countries
- The Alliance for American Solar Manufacturing and Trade (petitioner): Represents US manufacturers who argue they cannot compete with heavily subsidised Asian imports
- Anti-dumping duties (ADD) and CVDs can be applied simultaneously — total combined tariff burden can exceed 200%
Connection to this news: India moved into the US solar supply chain as Chinese panels faced restrictions. Now India is facing the same protectionist scrutiny. This creates a strategic dilemma for India's solar sector: domestic-focused manufacturing for 500 GW target versus export-oriented growth in the US market.
India-US Trade Relations and Solar Energy Geopolitics
Solar supply chains sit at the intersection of climate policy and strategic trade rivalries. The US-India relationship on energy and trade has been evolving through initiatives like iCET (initiative on Critical and Emerging Technologies) and the US-India Strategic Clean Energy Partnership.
- US-India iCET (2022): Framework for technology partnerships including semiconductors, clean energy, and defence
- US-India Strategic Clean Energy Partnership: Focuses on grid modernisation, gas, responsible energy development, clean fuels, and industrial efficiency
- India's solar import from China: Despite domestic manufacturing push, India still imports ~80% of solar components (cells, wafers, polysilicon) from China
- US Import Solar Tariff Timeline: Section 201 safeguard tariffs (2018) → AD/CVD on Chinese panels → ADD/CVD on Southeast Asian circumvention (2024) → CVD on India/Indonesia/Laos (2026)
- WTO dispute: India has previously challenged US solar safeguard tariffs at the WTO and won (DS456) — another WTO case is possible
Connection to this news: The 126% CVD disrupts India's ambition to become a major solar exporter. It also signals that even US strategic partners are not exempt from "America First" trade enforcement when it comes to politically sensitive sectors.
Key Facts & Data
- Preliminary CVD rate on Indian solar imports: 125.87%
- Investigation initiated: 6 August 2025 (by US Department of Commerce)
- Petitioner: Alliance for American Solar Manufacturing and Trade (First Solar, Mission Solar Energy, Hanwha Qcells)
- Adani entities cited: Mundra Solar Energy and Mundra Solar PV (withdrew from probe)
- Penalty mechanism: Adverse Facts Available (AFA)
- Other countries in probe: Indonesia (104.38%), Laos (80.67%)
- Combined India-Indonesia-Laos solar exports to US (2025): ~$4.5 billion (~two-thirds of total US solar imports)
- Final CVD determination deadline: 6 July 2026
- India's 2030 renewable energy target: 500 GW (solar component ~300 GW)
- PLI Scheme for Solar PV: ₹24,000 crore outlay; 65 GW capacity target