The United States Department of Commerce has imposed a steep 126 per cent tariff on solar products imported from India. The decision follows the withdrawal of two Adani Group companies, Mundra Solar Energy and Mundra Solar PV, from an ongoing anti-subsidy investigation. A preliminary report of the investigation, reviewed by The Indian Express, outlines the reasons behind the move.

The two Adani companies were described as “mandatory respondents” in the probe. Their decision not to continue participating in the investigation led US authorities to apply what is known as the “Adverse Facts Available” (AFA) method. This is considered the toughest penalty method used by the US Department of Commerce when companies do not cooperate.

The order, dated February 20, has resulted in heavy tariffs being placed on Indian solar products. According to the report, the companies’ lack of response affected the proceedings significantly. The anti-subsidy investigation report stated, “We preliminarily determine that these non-responsive mandatory respondents (i.e., Mundra Solar Energy and Mundra Solar PV) withheld necessary information that Commerce requested, failed to provide information within the established deadlines, and significantly impeded this proceeding by failing to respond to Commerce’s Initial Questionnaire, either in whole or in part, by the applicable deadline.”

The US Department of Commerce also concluded that “Mundra Solar Energy and Mundra Solar PV shipped solar cells in ‘massive’ quantities during a relatively short period” and that the companies benefited from several Indian government schemes. These included the Advance Authorisation Program/Advance License Program, Duty Free Import Authorisation Scheme Program, Duty Drawback Program, and the Export Promotion of Capital Goods Scheme.

The Indian Express sent an email query to the Adani Group, but did not receive a response. However, a company source said the matter was “sub judice,” meaning it is currently under legal consideration.

While announcing the tariffs, the US Department of Commerce also raised concerns about India’s dependence on Chinese imports for solar manufacturing. The report stated, “According to information provided by the petitioner, the Indian solar cells industry is heavily reliant on imports from China, and that Chinese investment in India follows the Chinese solar industry’s trend of investments in production facilities in Cambodia, Malaysia, Thailand and Vietnam.”

The countervailing duty (CVD) investigation was started on August 6 last year after a petition was filed by the Alliance for American Solar Manufacturing and Trade, a coalition representing US solar manufacturers. The petition raised concerns about subsidies and pricing advantages received by Indian solar exporters.

Ajay Srivastava, a former trade officer and head of the New Delhi-based think tank Global Trade Research Initiative (GTRI), explained that the case became more severe after the Adani firms withdrew from the investigation in November 2025. He said, “Other Indian manufacturers like Waaree 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 programmes, including Advance Authorisation, Duty Free Import Authorisation, Duty Drawback, RoDTEP (Remission of Duties and Taxes on Exported Products) and the Export Promotion Capital Goods Scheme. Because these benefits are tied to export performance, they are particularly vulnerable to countervailing duty findings.”

Another important development in the case was the change in the period of investigation. Based on requests from the Government of India and the Adani Group companies, the Department of Commerce amended the investigation period from January 1, 2024, through December 31, 2024, to April 1, 2024, through March 31, 2025. This change aligned the investigation with India’s most recently completed financial year.

Srivastava also pointed to a broader issue regarding transnational subsidies. He said US investigators looked into whether important raw materials such as polysilicon, silicon wafers, silver paste, solar glass, aluminium frames and junction boxes were supplied across borders at prices lower than market value. He warned, “Even if India redesigns its incentive programmes, exporters that rely on Chinese inputs may still face countervailing duties.”

Trade data shows that solar imports from India to the US were valued at $792.6 million in 2024. This represents more than a nine-fold increase compared with 2022 levels, according to the US Commerce Department. Data from India’s Ministry of Commerce revealed that between 2021 and 2024, more than 90 per cent of India’s solar photovoltaic module exports were shipped to the United States.

Industry experts have also raised concerns about the impact of these tariffs. Ankit Jain, vice-president and co-group head of corporate ratings at ICRA Limited, said the proposed duties and regulatory uncertainty in the US could reduce export volumes from India. He noted that exports stood at around 3 gigawatts (GW) in the last calendar year.

Jain said, “This could potentially exert pricing pressure on domestic OEMs and impact the profitability of solar module manufacturers.” He added that if export volumes are redirected to the Indian market, it could increase supply domestically and further pressure prices, affecting the financial health of solar module makers.

The new tariff decision is likely to have a major impact on India’s solar export sector, especially companies that depend heavily on the US market.