India’s solar sector at crossroads of trade remedy actions by USA

Introduction

Recently, the United States Department of Commerce (‘USDOC’) preliminarily found that crystalline silicon photovoltaic cells, whether or not assembled into modules, (‘PUC/ subject goods’) from India were sold, or likely to be sold, in the United States at less than fair value and that countervailable subsidies are being provided to producers and exporters of subject goods in India. USDOC assigned a dumping margin of 123.04% to Mundra Solar PV, Mundra Solar Energy, Kowa, Premier Energies, and all others.[1] Similarly, in the Countervailng Duty (CVD) investigation on subject goods, the USDOC assigned a subsidy rate of 125.87% to Mundra Solar Energy, Mundra Solar PV, and all others.[2] 

These findings have direct relevance for Indian producers and exporters of subject goods. This article aims to analyze how the USDOC reached these outcomes, with focus on adverse-facts-available (‘AFA’), critical circumstances, and the emerging issue of transnational subsidies linked to Chinese-origin inputs.

Anti-dumping determination

In the preliminary determination, the USDOC calculated a uniform 123.04% weighted-average dumping margin for all entities, including the mandatory respondents. This margin was assigned using AFA as the USDOC determined that the companies did not act to the best of their ability to comply with the USDOC’s requests for information. 

USDOC first selected Mundra Solar PV and Mundra Solar Energy as mandatory respondents. Both companies filed a Section A response but later withdrew from the investigation. USDOC then selected Kowa and Premier Energies as additional mandatory respondents. Kowa informed USDOC that it would not participate, and Premier Energies also withdrew.

This sequence shaped the entire determination. USDOC did not have complete home market sales data, US sales data, or cost of production data. It therefore concluded that necessary information was missing and that the respondents had withheld requested information, failed to provide it within the prescribed deadlines, and significantly impeded the investigation. On this basis, USDOC applied AFA under Section 776 of the Tariff Act of 1930.

The resulting dumping margin was therefore not a company-specific margin calculated from verified transaction data. It was a petition-based AFA margin. For Indian exporters, the finding shows the risk of non-participation in US Anti-Dumping proceedings. A decision not to participate may leave USDOC with no other option and allow a petition-based rate to define the market position of both selected and non-selected exporters.

CVD determination

The CVD preliminary determination has a different structure from the anti-dumping determination. USDOC examined several categories of programs including Production Linked Incentive schemes, export schemes, tax programs, SEZ-related benefits, grants, loans, state-level incentives, alleged purchases for more than adequate remuneration, and alleged transnational subsidies linked to Chinese-origin inputs.

However, the process again turned on the conduct of the mandatory respondents. USDOC selected Mundra Solar Energy and Mundra Solar PV as mandatory respondents. The Government of India (‘GOI’) and Government of China (‘GOC’) filed responses. Mundra Solar Energy and Mundra Solar PV filed a response, but USDOC recorded that the response was incomplete. Both companies later withdrew from the proceeding. USDOC therefore did not have company-specific information to test actual use, benefit, attribution, or cross-owned entity issues.

This gap affected the entire subsidy analysis. USDOC applied AFA to the mandatory respondents and treated several programs as used and beneficial to them. USDOC also relied on facts available where it considered the GOI’s program-level information to be insufficient to determine financial contribution or specificity. The result was a cumulative subsidy rate applying AFA for all producers/ exporters under Section 776 of the Tariff Act of 1930.

Transnational subsidies: Chinese inputs and an emerging CVD theory

USDOC did not limit its enquiry to subsidies granted by the GOI or state governments in India. It also examined whether the GOC provided Chinese-origin inputs to Indian producers for less than adequate remuneration. The inputs examined included polysilicon, silicon wafers, silver paste, solar glass, aluminium solar frames and junction boxes.

USDOC’s analysis proceeded in two stages. First, it asked whether Chinese producers of these inputs could be treated as ‘authorities’ for purposes of the US CVD law. For this, USDOC sought information from the GOC on ownership structure, registration documents, ultimate state ownership, articles of incorporation, company by-laws, annual reports, articles of association, and the role of officials or committees in the management of input producers. USDOC relied on AFA and held that GOC could not verify or provide information on program related to exporters or producers of the subject goods originating in India.

Second, USDOC relied on record material placed by the petitioner. This included information on China’s share in global production of key solar inputs, Chinese five-year plans, alleged state control over input producers, export data showing price differences, and earlier CVD findings in solar cell investigations involving Cambodia, Malaysia, Thailand and Vietnam. For example, for polysilicon, USDOC referred to petitioner’s information that China produced 93% of the world’s solar-grade polysilicon.

The legal difficulty is that the alleged subsidizing government was not India, while the investigated producers/exporters were Indian. This is where the SCM Agreement becomes important. Article 1.1 of the SCM Agreement defines subsidy by reference to a financial contribution by a government or public body conferring a benefit. Article 2 requires specificity to an enterprise, industry, or group of enterprises or industries within the jurisdiction of the granting authority.

The GOC’s response challenged USDOC’s legal basis. It argued that transnational subsidies do not constitute a financial contribution under Article 1.1 of the SCM Agreement, and that countervailing such subsidies violates the jurisdictional requirement under Article 2. It also argued that neither WTO rules nor US law permit countervailing investigation of transnational subsidies. It also argued that prior South-East Asia findings on subject goods cannot establish the existence of program in the India case. On merits, it disputed public body status, specificity, benefit and pass-through. It argued that any subsidy to a Chinese input producer cannot be presumed to pass through to an Indian producer buying the input in a market transaction.

While the GOC’s arguments are primarily on legal structure and pass-through, the USDOC’s reasoning is more dependent on missing information and AFA. Its approach is that the absence of complete GOC and respondent data prevented a full test of ownership, control, pricing and benefit. For Indian producers of subject goods, the risk is clear. Even if the subsidy is not granted by India, sourcing from China can become a CVD issue if the record does not establish arm’s-length pricing, supplier identity, and absence of benefit transmission.

Critical circumstances: Retroactive duty exposure

Critical circumstances is a finding that allows US authorities to apply anti-dumping or CVD measures retroactively to recent imports, rather than only to imports made after the preliminary determination is published. In order to ascertain critical circumstances, USDOC normally compares the import volumes of the subject merchandise for at least three months immediately preceding the filing of the petition to a comparable period of at least three months following the filing of the petition to ascertain the increase in imports. Such imports must increase by at least 15 percent during the comparison period to be considered massive. 

In simple terms, if USDOC believes that there is massive surge in imports of goods into the US after becoming aware that duties were likely, it may permit duties to apply to unliquidated entries made up to 90 days before publication of the preliminary determination. 

Since no mandatory respondents were participating, USDOC did not request monthly shipment data from any company and proceeded on the data available.

The USDOC preliminarily found that critical circumstances exist for mandatory respondents, but not for all other exporters and producers from India. Therefore, it directed that suspension of liquidation would apply to unliquidated entries from these identified producers/exporters entered up to 90 days before publication of the preliminary determination. This will have a significant implication for the mandatory exporters/producers.

Context of India's solar industry and export trajectory

The US proceedings also sit against India’s own solar trade remedy context. In September 2025, the Directorate General of Trade Remedies (‘DGTR’) of India issued final findings in the anti-dumping investigation on imports of solar cells, whether or not assembled in modules or panels, from China. DGTR recommended anti-dumping duty for three years. 

This explains the commercial position of Indian manufacturers. They face price competition from Chinese-origin products in India. At the same time, their exports to the U.S. are being examined partly through the lens of Chinese-origin input dependence. The DGTR recommendation was faced with legal and policy friction before translating into non-imposition of anti-dumping duty. For Indian producers, this creates a policy tension. Domestic protection, export growth, and input sourcing cannot be viewed separately.

Way forward for Indian producers of subject goods

The preliminary determinations show that Indian producers of subject goods must treat proceedings as market-access issues, not only as legal proceedings. Participation strategy is central. Where selected exporters do not place sales, cost, subsidy and sourcing data on record, USDOC may rely on AFA. This can affect not only the selected companies, but also the all-others rate. 

Indian exporters should therefore maintain investigation-ready records. This includes transaction-level sales data, cost data, subsidy usage records, related-party information, supplier details and input pricing evidence. Sourcing from China also requires closer review. Considering USDOC’s transnational subsidy approach, exporters may need to demonstrate supplier identity, ownership, arm’s-length pricing and absence of pass-through of any alleged benefit. 

For India, the outcome could catalyze a more integrated, less import-dependent solar value chain, positioning it as a resilient global player even as it navigates protectionist headwinds in key export destinations.

[The authors are Senior Associate and Associate, respectively, in International Trade & WTO practice at Lakshmikumaran & Sridharan Attorneys, New Delhi]

[1] https://www.govinfo.gov/content/pkg/FR-2026-04-28/pdf/2026-08194.pdf

[2] https://www.govinfo.gov/content/pkg/FR-2026-02-26/pdf/2026-03895.pdf