India’s commerce ministry investigating US policies that could have unfairly promoted US solar companies
For the second time in less than a year, the United States will approach the World Trade Organization (WTO) with a complaint against India’s policy of domestic sourcing of solar panels for its flagship Jawaharlal Nehru National Solar Mission. India has denied the charges made by the US and in turn wants to take on the US for its policies to promote its own domestic solar equipment manufacturers.
US trade representative, Michael Froman, at a press conference in Washington on February 10 said that the domestic content requirement for India’s biggest solar energy programme was discriminatory and against the interests of US exports of solar cells and modules. “Domestic content requirement (domestic sourcing of solar equipment) detracts from successful cooperation on clean energy and actually impede India’s deployment of solar energy by raising its cost,” Froman told reporters.
Sore over domestic sourcing of solar equipment
The current complaint has been filed in response to the second phase of JNNSM which plans to add 9,000 MW of solar energy capacity by 2017. The bids for the first batch of 750 MW in this phase were received in January this year. The guidelines for this batch say that 375 MW will have to be set up using domestically assembled silicon modules while the remaining 50 per cent can be imported.
A Ministry of New and Renewable Energy (MNRE) official says that India has not broken any WTO rule, and the domestic content regulation falls in line with the Government Procurement Agreement (GPA) of WTO. Under normal circumstances, GPA does not allow discrimination between domestic and imported goods, but there are certain exceptions where a government can prefer domestic supplies if their purported use is not for profit and if there is no reselling involved. India will go to the WTO consultations armed with this defence, he says.
The MNRE official says that there is no reason for the US to complain as 30-40 percent of 500 MW of solar PV panels used in Phase 1 of the JNNSM came from the US. This time around there is 375 MW up for grabs for any company in the world.
Tit for tat
Meanwhile, India’s commerce ministry wants to take on the US headlong. It is now investigating US policies that that could have unfairly promoted US solar companies. Commerce secretary Rajeev Kher told reporters on Tuesday that at least 13 states in the US follow extremely biased policies to promote home-manufactured solar panels, something very similar to what they have accused India of doing.
In February 2013, the US had made a similar complaint against India to WTO for favouring domestic producers in Phase 1 of JNNSM. The complaint has not moved beyond the consultations stage, informs Abhijit Das, director of WTO studies at the Indian Institute of Foreign Trade, New Delhi.
Das informs that once a complaint is made to WTO, consultations between the complainant and the offender will have to begin within 60 days. The duration of these consultations can range anywhere between six to nine months. In case there is no outcome in this case, the US can ask for setting up of a panel which can decide on the outcome.
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