US New Bill: 5 Ways It Impacts Indian Solar Firms in USA

Washington DC / New Delhi — Indian solar companies looking to expand their manufacturing footprint in the United States may face unexpected roadblocks, thanks to a new US Congressional bill focused on reshaping clean energy incentives and domestic supply chains.

The proposed legislation, introduced in mid-2025, aims to tighten eligibility requirements for tax breaks and subsidies under the Inflation Reduction Act (IRA). While the bill still needs to pass the Senate and House, its provisions could significantly impact Indian solar manufacturers with plans to “Make in USA”.

Here’s a breakdown of how the US new bill could affect Indian solar firms, and what it means for their long-term strategies.

1. Tighter Rules on Foreign-Controlled Entities

One of the key provisions in the new bill is a clause that restricts tax credits and subsidies for companies that are majority-owned or significantly influenced by foreign governments or corporations.

While this targets entities linked to China, it could indirectly impact Indian firms that have parent companies, joint ventures, or large shareholders in India.

For example, if an Indian solar firm sets up a manufacturing facility in Texas or Arizona, it may no longer qualify for federal tax credits under the new rule unless it can prove full American operational control.

“This bill may redefine what counts as a U.S. company,” says energy analyst Sarah Whitman. “Indian firms will need to reconsider their ownership structure to stay compliant.”

2. Supply Chain Requirements: Raw Materials Must Be US-Based

The bill proposes new supply chain rules, mandating that a significant percentage of solar panel materials — such as polysilicon, wafers, and cells — must be sourced or processed in the U.S. or allied nations.

Most Indian firms currently source raw materials from China or Southeast Asia. This requirement would force them to rebuild their supply chains, raising costs and complicating logistics.

“If you’re assembling in the U.S. but sourcing from Asia, you may no longer qualify for federal support,” explains Rajeev Kapoor, CEO of a Pune-based solar startup.

This provision could hit Indian manufacturers who were relying on the ‘Made in USA’ label while still importing key components.

3. Rising Operational Costs in the U.S.

The new bill also includes measures that could increase the labor and compliance costs for solar factories in the U.S.

These include:

• Higher wage requirements under federal funding
• Stricter environmental compliance in solar production
• More frequent audits and reporting requirements

Indian companies that chose the U.S. for lower energy costs and subsidies may now face a narrower profit margin.

“Setting up in the U.S. was attractive because of the IRA’s benefits. But if costs rise and credits shrink, many projects may no longer be viable,” said Arjun Menon, CFO of an Indian solar exporter.

4. Uncertainty in State-Level Incentives

While the bill is federal, it has triggered uncertainty at the state level too. States like Georgia, Texas, and Ohio have been courting Indian solar manufacturers with promises of land, tax breaks, and expedited approvals.

Now, state governments are unsure if companies affected by the bill will still receive federal funding. That makes states less willing to offer local subsidies, delaying many proposed Indian-led projects.

“We’ve paused final approval for two large solar factory proposals until we understand the federal bill better,” a Florida economic development officer confirmed on condition of anonymity.

This growing hesitation from local governments adds another layer of risk for Indian firms banking on state-federal cooperation.

5. Strategic Shift Toward Latin America and Africa?

With the U.S. becoming a more complex and expensive destination, some Indian solar companies are already looking elsewhere.

Latin American and African markets are becoming more appealing for manufacturing and exports. These regions offer:

• Lower setup costs
• Fewer restrictions on ownership
• Expanding demand for clean energy

Indian firms may still retain a small assembly presence in the U.S. for branding or logistics, but shift major operations elsewhere.

“The U.S. market is important, but it’s no longer the only one,” says Sushil Gupta, Head of Strategy at Vikram Solar. “We need to be agile.”

Background: Why Indian Firms Chose ‘Make in USA’

Over the last two years, several Indian solar companies have announced plans to set up manufacturing in the U.S. due to:

• The Inflation Reduction Act (IRA), which offers up to 30% tax credits
• High demand for clean energy and solar adoption in the U.S.
• A push from both U.S. and Indian governments to promote bilateral green partnerships

Companies like Waaree Energies, Tata Power Solar, and Adani Solar have explored U.S. expansion either directly or via partnerships.

The strategy was seen as a win-win: the U.S. got new jobs and supply security, while Indian firms accessed one of the world’s most lucrative solar markets.

However, the new bill could disrupt that model, introducing challenges Indian manufacturers had not fully anticipated.

Industry Reaction: Mixed but Watching Closely

So far, Indian solar industry leaders are responding with caution, not panic.

Some see the bill as a temporary political move that may be revised in committee discussions. Others fear a long-term shift in U.S. policy away from global integration toward protectionism.

“If this bill passes in its current form, Indian companies will need to rework their U.S. strategy,” said Ananya Rao, a trade advisor for India’s Ministry of Commerce.

There are calls for bilateral trade discussions between India and the U.S. to address the issue, especially under the U.S.-India Strategic Clean Energy Partnership.

Final Thoughts

The US new bill affecting Indian solar firms’ ‘Make in USA’ plans marks a significant turning point in how global clean energy companies interact with American policy.

While the bill still has to clear various stages in Congress, its current language suggests a clear move toward tightening foreign influence and emphasizing domestic supply chains.

For Indian companies, this is a moment to pause, rethink, and strategize more carefully. The road ahead may be more complex, but with smart adjustments and diplomacy, opportunities in the U.S. may still be within reach.