How US tariffs on Chinese solar panels made these Indians one of world's richest

The United States imposing tariffs on Chinese solar panels has proven beneficial for Indians who are now cashing in on the situation and filling the void left by exclusion of exports from Beijing.

The US’ decision of high tariffs on imports of solar cells, EVs, batteries and critical minerals from China came into force on September 27 and with this, doors of bigger opportunities opened up for several Indian manufacturers.

But, before we talk about how Indians benefitting, let us first know why the US is imposing additional tariffs on solar imports.

Why is US imposing tariffs on Chinese solar panels imports?

Washington has taken the step to protect the domestic industry after a massive number of Chinese-produced panels pushed the global prices to record lows.

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The Biden administration has raked up protections against solar imports from Beijing, doubled the duty rate for Chinese cells, imposed anti-circumvention tariffs on Chinese companies in south-east Asia, and banned goods linked to forced labour in Xinjiang.

Also, the White House maintained Trump-era tariffs that applied to solar products from most countries.

However, the imports of solar panels by the US remain at record highs.

‘Tariffs haven’t worked’

A report by Financial Times, quoted Pol Lezcano, senior analyst at BloombergNEF, as saying: “Tariffs haven’t worked."

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Lezcano further said that manufacturers are not coming to the US as they “don’t really find the right business and supply chain environment,” required by them to scale up manufacturing.

How India is gaining from US tariffs on Chinese solar panels?

Now, let us understand how Indians are reaping benefits from the US tariffs on Chinese solar panels.

As per the FT report, last month (in October), the US Department of Commerce had released preliminary estimates of duties as high as 293 per cent for solar cell exporters in four countries in south-east Asia, where America sources the bulk of its solar supplies, often from Chinese companies.

With the imposition of higher duty on imports of Chinese solar panels, developers and manufacturers started turning towards markets, including India, which are not subject to tariffs.

At the same time, Indian manufacturers have increased the pace of investing in US factories, especially after American President Joe Biden’s landmark Inflation Reduction Act, which included lucrative subsidies for domestic producers.

Many US companies are also getting into joint ventures with Indian firms to insulate themselves from new tariffs.

As per the FT report, Heliene, which operates a solar panel factory in Minnesota, announced a $150 million joint venture with Premier Energies, India’s second-largest solar cell manufacturer, to build a US factory.

Heliene earlier used to source its cell from Vietnam and Malaysia, but is now purchasing primarily from India.

Waaree Energies Ltd, another renewable energy company, one of India’s largest solar module manufacturers, has been making most of its revenue from export sales to the US, according to a report by Bloomberg.

Waaree Energies Ltd, the solar cell manufacturing arm of Waaree Group with a capacity of 12,000 megawatts is led by Hitesh Chimanlal Doshi. It got listed in the Indian stock exchange on October 28, 2024.

VSK Energy, a venture backed by Indian solar panel maker Vikram Solar Ltd, and Waaree last year announced manufacturing commitments worth at least $1 billion each.

‘India can become plus one to China’

The FT report quoted Sumant Sinha, chief executive of ReNew, one of India’s largest renewables companies, as saying that there “will be demand” for solar components from India as the US reduces reliance on Chinese supplies for its energy transition.

“​​There is a need for some diversification, and India can actually become that plus one to China as far as the green tech supply chain is concerned,” he said.

Sinha further said that ReNew was considering exporting to the US from its solar factories in India pending US tariff rules. “[India] will fill the gap.”

The report further mentioned Wood Mackenzie, a global provider of data and analytics for the energy transition, stating that it expects cell manufacturing in countries outside of the main hubs of China and south-east Asia to more than double over the next couple of years, with India making up 40 per cent of new capacity.

As per BloombergNEF, US imports of Indian panels and cells in 2023 breached $1.8 billion, way above nearly $250 million the year before.