China's Tax Rebate Cut Sparks Volatility for Indian Solar Stocks
Overview
China is cancelling value-added tax rebates on 249 products, including solar cells, effective April 1. This move by Beijing to address overcapacity is expected to put pressure on Indian solar manufacturers like Premier Energies and Waaree Energies, which have already seen significant stock price declines.
Stocks Mentioned
China Slashes Solar Tax Rebates, Indian Firms Brace for Impact
Shares of Premier Energies Ltd. and Waaree Energies Ltd. are poised for heightened volatility as China moves to cancel value-added tax (VAT) rebates on hundreds of products, including critical solar components. The Chinese finance ministry announced Friday the phased removal of these rebates, signaling a significant shift in trade policy aimed at managing domestic overcapacity.
Starting April 1, China will eliminate VAT rebates for 249 items, a list encompassing solar cells and lithium hexafluorophosphate. The specific rebate for photovoltaic and related products is slated for cancellation on April 1, 2026. This strategic move by Beijing directly targets its expanding export sectors, which have been grappling with intense price competition and oversupply.
Stock Performance Under Scrutiny
The impact is already being felt, or anticipated, by Indian market participants. Premier Energies has endured a six-day losing streak, with only one gain in the last eleven sessions. Waaree Energies has fared similarly, declining in ten of the last twelve trading sessions since December 23. Both companies, relatively new to the futures and options segment, have seen substantial corrections, with Premier Energies down approximately 45% from its peak and Waaree Energies over 30% from its recent 52-week high.
While Premier Energies has a limited export footprint, Waaree Energies is a significant player in international markets. The implications of reduced Chinese export competitiveness due to the rebate cancellation could either offer a temporary reprieve or intensify pricing pressures depending on how Waaree Energies navigates the evolving trade dynamics. The company has been approached for comment.
