U.S.–India trade deal cuts solar panel tariffs, easing barriers for Indian exports

A newly announced U.S.–India trade agreement is set to significantly reduce tariffs on Indian solar panels and related energy equipment, a move that industry analysts say could reshape trade flows and bolster solar supply chains between the world’s two largest democracies. The pact, part of a broader economic and diplomatic understanding between President Donald Trump and Indian Prime Minister Narendra Modi, cuts the United States’ general tariff on Indian exports to approximately 18%, down from earlier levels that in some cases reached 50%.

The tariff reduction is expected to benefit Indian manufacturers of photovoltaic (PV) modules as well as other clean-energy equipment by lowering the cost of their products in the U.S. market, where they have faced prohibitive duties over the past year. Industry executives describe the change as a strategic turning point for Indo-U.S. solar trade after months of elevated tariffs designed to protect domestic manufacturers and address geopolitical tensions.

Tariff Shift Offers Competitive Relief

Under the new trade framework, U.S. tariffs on Indian goods, including solar cells and modules, are reduced to 18% from previously much higher rates. Analysts report that the total burden on some solar imports had effectively approached roughly 50% when combining base reciprocal tariffs with punitive levies that were imposed amid broader trade tensions.

For solar manufacturers, this seven-percentage-point reduction materially improves their competitiveness in the U.S. market. Prashant Mathur, CEO of Indian PV maker Saatvik Green Energy, called the tariff cut a “strategic turning point,” saying it enhances cost efficiency and positions Indian products to be more profitable for U.S. developers. Companies that once paused U.S. expansion plans are reportedly reopening talks with American buyers and revisiting potential manufacturing investments.

Industry reaction and export dynamics

India has rapidly become one of the top exporters of solar modules to the United States. According to industry data, Indian manufacturers shipped around 10.4 GW of solar modules into the U.S. in the first nine months of 2025, with nearly 97% of those exports destined for American buyers. This accounted for roughly 11% of total U.S. solar import volumes, a substantial increase from previous years.

Indian companies including Vikram Solar and Waaree Energies have said the tariff change will provide “demand visibility” essential for capacity planning and long-term investment. Executives have expressed optimism that lower duties will enable their products to compete more effectively with other global suppliers, especially at a time when the U.S. solar market continues to grow but supply chains remain volatile.

Ongoing trade and regulatory issues

Even with the tariff cut, trade challenges remain. The United States is investigating possible antidumping and countervailing duties (AD/CVD) on crystalline silicon solar cells and modules imported from India, Indonesia and Laos. These investigations, which are ongoing, could result in additional duties if unfair trade practices are found.

Moreover, broader trade dynamics and supply-chain concerns continue to influence solar deployment in the U.S. market. Indian panels will still face competition from modules sourced from Southeast Asia and other regions, particularly if duties tied to AD/CVD investigations are ultimately imposed.

Strategic and diplomatic context

The tariff reduction is part of a larger U.S.–India trade agreement that includes reciprocal tariff cuts and expanded market access for many goods. Under the framework, India has agreed to halt certain oil purchases from Russia and commit to significant imports of U.S. energy and technology products over the next five years. (Reuters)

Supporters of the trade deal argue that lowering barriers on solar and clean-energy equipment aligns with efforts to diversify supply chains and support energy transition goals. At the same time, some U.S. domestic manufacturers have raised concerns that cheaper foreign imports could undercut local production, highlighting ongoing debates over trade policy and industrial competitiveness.

As tariff changes take effect and negotiations continue, industry observers will be watching whether reduced duties translate into increased Indian panel shipments and whether additional trade remedies emerge. For now, the new tariff structure offers a renewed opportunity for strengthened economic ties between the United States and India, with potential implications for global solar supply chains and clean-energy deployment.

Sources:

• U.S.–India trade agreement reduces solar panel tariffs (Solar Power World Online) (Solar Power World)
• U.S.–India trade deal cuts solar tariffs to 18% (pv-magazine USA) (pv magazine USA)
• Reuters reporting on U.S.–India tariff reduction and trade pact context (Reuters)