Domestic Content requirement of India’s Solar Mission
challenged by US and India's response
Domestic
content requirement of India's solar mission on 10 February 2014 was challenged
by the United States, which it alleged as discriminatory and against
international norms including the laws of WTO. It has badly affected the
American domestic solar panel manufacturing industry.
The decision was taken by US as a measure to protect 10000 American jobs in solar industry and to have a significant pie in the second largest solar market of the world. Domestic content requirements of India’s solar mission in Phase II discriminates against US solar cells and modules by requiring to use India-manufactured solar cells and modules instead of US or other imported equipment.
Background
India launched its National Solar Policy on 11 January 2010 named as Jawaharlal Nehru National Solar Mission (JNNSM). The Phase I of the national policy was composed of two parts
• Batch 1 of policy implementation: India required developers of solar photovoltaic (“PV”) projects employing crystalline silicon technology to use solar modules manufactured in India.
• Batch 2: India expanded this domestic sourcing requirement to crystalline silicon solar cells as well.
In the phase II of the solar draft policy, India has considered expansion of the scope of the domestic content requirements further to include solar thin film technologies and the cells and at present the majority is comprised of US solar exports to India.
India's response
This domestic content requirement
was only for projects awarded under the NSM and not for those set up under the
various states’ programmes. Notably, of the 1,200 MW of capacity in India
today, about 850 MW has come under Gujarat’s programme. Most of those putting
up projects under the states’ programmes are therefore importing their modules.
Thus, the NSM projects were importing thin films (mainly from the U.S.),
those under states’ programmes are importing crystalline silicon modules
(mainly from China) and nobody is buying from Indian manufacturers.
Giving in
Against this backdrop, India
initiated anti-dumping investigations in November last year against
manufacturers in China, USA, Taiwan and Malaysia, deferring to the pleas of the
domestic manufacturing industry. The
solar power generators were promptly up in arms, pleading that the duty would
make their upcoming projects unviable, given that most of them were won under thin-margin
tariffs determined through competitive bidding processes.
Now, the U.S. has taken India to
WTO over the ‘domestic content requirement’ (DCR) under the NSM. India is likely to argue that the NSM is in
the nature of government procurement — because the power is bought by a
government-owned company. India is not a signatory to the Agreement on
Government Procurement, hence, no violation.
Secondly, India will argue that the DCR rules have truly caused no
damage to any overseas manufacturers, because
it is applied on a very small portion of the country’s goals, the rules do not
cover states’ programmes.
