India Modifies its Solar Programme for US
India has sent a proposal to US with the aim of striking a bilateral deal ahead of the World Trade Organisation’s (WTO) final ruling. India had lost the preliminary case at the WTO in August 2015.
As per the new proposal which has been jointly drafted by commerce ministry and the ministry of new and renewable energy, India is now going to use the domestic content requirement for purchase of solar panels for its own use, for instance, railways and defence. India will not be selling the power produced from these subsidised panels for commercial use.
As a commerce ministry official stated, “We hope the US will accept the proposal and withdraw the case from the WTO. This is also in the interest of the US as China has taken over the solar panel production and the US is no longer a large player in this business.”
The US had asked India for consultations in February 2013. This was with respect to measures regarding domestic content needs under the Jawaharlal Nehru National Solar Mission (NSM) for solar cells and solar modules. There was a dispute settlement panel set up in May 2014 for examining the complaint.
The Indian power minister, Piyush Goyal had reported to the Lok Sabha in December that China accounted for 66 per cent of Indian imports of solar power panels in April-June 2015. Over 29 million of the 44 million solar power panels that were imported had come from China during the period, followed by Taiwan and Malaysia.
Mr Goyal had also told the Lok Sabha in August 2015 that the total annual installed domestic manufacturing capacity of solar cells and modules is 1,328MW and 2,523MW. India’s local content need is merely for 5,000MW each for rooftop and land-based projects. The government is providing subsidy for the same along with financial aid of up to Rs.1 crore per MW to the implementing agency for the set up of big solar capacities by placing orders with domestic manufacturers.
As stressed by Sambitosh Mohapatra overseeing power and utilities practice at PricewaterhouseCoopers, the revived interest in the manufacture of solar panels in India by companies like Foxconn and Chinese solar-panel maker, Hareon Solar Technology Co., India is equipped to cope with any severe judgement posed by the WTO.
He also specified that the government through its Modified Special Incentive Package Scheme (M-SIPS) offers capital and subsidy to get solar panel producers to make in India. Many of the government tenders do not have a local content requirement and the context of the WTO judgement has changed tremendously from the time it was filed in 2013.