How India Is Turning The U.S. Tariff Barriers Into Opportunities

The recent imposition of steep tariffs by the United States on Indian goods, including renewable energy components, is expected to have a significant and multifaceted impact on India's renewable energy sector.

- VIPIN TIWARI

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