I. Understanding India’s Four-Tiered Tax Structure
Import tariffs on photovoltaic (PV) products in India follow a “multi-layered” structure; relying solely on the BCD (Basic Customs Duty) when quoting prices leads to a significant underestimation of the total tax burden. Based on the 2026-27 fiscal year budget (Notification No. 02/2026-Customs, dated February 1, 2026), the complete tax system comprises four tiers: Tier 1 is the BCD, with rates for both solar cells and modules reduced to 20% (down from the previous 25% for cells and 40% for modules);
Tier 2 is the AIDC (Agriculture Infrastructure and Development Cess), levied at 7.5% for cells and 20% for modules; Tier 3 is the SWS (Social Welfare Surcharge), calculated at 10% of the sum of BCD and AIDC (approximately 4% of the CIF value); and Tier 4 is the IGST (Integrated Goods and Services Tax), levied at 12% of the duty-paid value—while importers can claim input tax credits for this, it represents a cash-flow cost rather than a final cost. In aggregate, the non-deductible tax burden (BCD + AIDC + SWS) for imported modules is approximately 44% of the CIF value.
This is comparable to the effective protection level seen during the era of the 40% basic tariff in 2022; however, as some industry quotes still reference the old “40%” figure, companies must recalculate costs based on the new rates.
II. Reference Tax Rates by Product Category
According to the Indian Customs Tariff (HSN), tax rates for various photovoltaic products are as follows: Solar cells (HSN 8541 40 11) are subject to BCD (Basic Customs Duty) of 20%, plus AIDC (Agriculture Infrastructure and Development Cess) of 7.5%, SWS (Social Welfare Surcharge) of approximately 2.75%, and IGST (Integrated Goods and Services Tax) of 12%; solar modules (HSN 8541 40 12) are subject to BCD of 20%, plus AIDC of 20%, SWS of approximately 4%, and IGST of 12%; solar inverters (HSN 8504 40 11) are classified separately, with BCD at 20% and GST at 12%; auxiliary components such as PV mounting structures, cables, switchgear, and junction boxes—mostly steel structures or electrical products—generally incur BCD ranging from 7.5% to 10% (determined by their specific HS codes) and a domestic sales GST of 18%; energy storage batteries (LFP, lithium-ion) are subject to GST at 18%; silicon wafers (HSN 3818 00) were previously exempt from BCD, but this exemption expired on March 31, 2026, after which standard rates apply.
It should be noted that the GST rate for solar cells and modules was reduced from 12% to 5% effective September 22, 2025, to lower PV project costs; however, IGST at the import stage is still levied at 12% (and remains creditable). With these two different rates coexisting, export quotations should clearly distinguish between “CIF price (excluding tax)” and “landed cost (duty-paid).”
III.
ALMM and Localization Thresholds: Stricter than Tariffs
India’s restrictions on imported PV products go far beyond tariffs.
Its “Approved List of Models and Manufacturers” (ALMM) policy stipulates that government-backed PV projects may only procure listed domestic modules, effectively excluding Chinese manufacturers from such projects. Starting June 1, 2026, the ALMM’s second list will further mandate the use of Indian-made cells for large-scale grid-connected projects, and silicon wafers will be added to the mandatory localization list beginning June 1, 2028. Coupled with substantial subsidies from the “Production Linked Incentive” (PLI) scheme, India’s module production capacity has surged from under 38 GW in 2022 to approximately 120 GW;
domestic capacity utilization reached 85% at one point, while the market share of Chinese modules in India plummeted from 65% to around 15%.
For enterprises, the nature of the project must be assessed before exporting cells, modules, or wafers to India: government-subsidized projects are essentially inaccessible to imports, and only purely commercial projects offer viable opportunities beyond tariff considerations—a factor that takes precedence over the tax rate itself.
IV.
Anti-dumping Developments and New Changes for 2026
Beyond tariffs, there are risks associated with trade remedies.
On September 29, 2025, India’s Ministry of Commerce and Industry issued a final anti-dumping ruling recommending the imposition of anti-dumping duties on solar cells and modules imported from China for a three-year period, with rates tiered at 0%, 23%, and 30% based on the level of corporate cooperation. As of the end of 2025, this recommendation had not yet received final approval from the Ministry of Finance; if implemented, these duties would be applied in addition to the Basic Customs Duty (BCD) and the Agriculture Infrastructure and Development Cess (AIDC).
It is worth noting that China’s exports of solar cells to India grew by 56.8% year-on-year in 2025; the expansion of India’s domestic module capacity actually drove demand for imported cells (with Chinese cells accounting for approximately 40% of total imports), suggesting room for short-term policy adjustments based on supply and demand dynamics.
Enterprises should monitor the Ministry of Finance’s progress regarding the final anti-dumping ruling and incorporate tariff-adjustment clauses into their price quotations and contracts to prevent profit erosion caused by potential tariff hikes during order execution.
V. Recommendations on Pricing and Compliance
Exporting enterprises targeting the Indian market are advised to adopt four measures: First, calculate the landed cost comprehensively using the formula “CIF Price + BCD + AIDC + SWS + IGST,” and avoid quoting based on the outdated “40%” benchmark or the Basic Customs Duty (BCD) alone. Second, verify HSN codes and tax rates for each specific product—classifying and declaring cells, modules, inverters, and auxiliary components separately—as misclassification can lead to customs revaluation and the imposition of additional tax liabilities. Third, confirm in advance whether the client’s project is subject to ALMM (Approved List of Models and Manufacturers) requirements to avoid submitting futile quotes for government projects that explicitly prohibit imported modules. Fourth, monitor the approval progress of final anti-dumping rulings and tax rate changes following the expiration of wafer exemptions;
incorporate clauses regarding tax rate adjustments and exchange rate linkages into contracts, and be prepared to renegotiate terms with clients in the event of major policy shifts.
For companies planning a long-term presence, a more prudent strategy involves local manufacturing or entering the ALMM system through joint ventures with local partners, as the tariff and policy risks associated with a pure trading model continue to rise.
Conclusion
The tariff structure for exporting photovoltaic components to India can be summarized as “four layers of cumulative duties, product-specific application, and policy precedence over tariffs”: for the 2026–27 fiscal year, the BCD on cells and modules stands at 20%, with the actual non-deductible tax burden on modules reaching approximately 44% of the CIF value.
When combined with ALMM localization requirements and anti-dumping investigations, the core variable in the Indian market has shifted from tax rates to market entry barriers.
Only by quoting based on new tax rates and formulating strategies aligned with current policies can companies gain a firm foothold in this rapidly growing yet highly protected market.
