India proposes resolution to solar domestic content dispute

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The Indian government has confirmed it will offer developers the option to bid for projects with or without a domestic content requirement (DCR), which could serve to placate domestic grievances against importers of modules.

The Jawaharlal Nehru National Solar Mission (JNNSM) Phase II, Batch I, Draft Methodology proposes the installation of 750MW of grid-connected solar projects. There has been speculation that out of this 750MW capacity, DCR would be applied to 250MW of projects while the remaining 500MW of projects will be able to choose either domestically sourced or imported components. 

Hari Manoharan from India-based RESolve Energy Consultants said the optional DCR “levels the playing field” between domestically manufactured modules and those that are imported.

Madhavan Nampoothiri, founder and director of RESolve, told PV-Tech that the optional DCR would also placate all parties involved in the complaint filed with the Indian government last year alleging that module suppliers from the US, China, Malaysia and Taiwan are selling below cost, or “dumping”, on the Indian market.

“Only the part of the mission that has DCR will be affected,” said Nampoothiri. “In a way, it could be risk mitigation against the entire mission getting stalled due to the disputes.

“By having two separate targets, the government might be trying to keep the developers and the overseas manufacturers happy on one side. On the other hand, the domestic manufacturers might also get a partial satisfaction that they do not have to compete with the imported modules.”

In addition, the DCR currently only applies to crystalline silicon based modules with thin film being exempt. However, this has resulted in companies importing thin-film technologies to the detriment of its domestic module manufacturers.

However, Manoharan believes the DCR choice provided by the government makes technology a moot point.

“Technology choice does not matter because there are two separate windows for allocation – one with domestic modules and one without,” said Manoharan.

“Developers feel that using imported components are most cost effective and thus they would prefer import which alienates the local manufacturers.

“Now having a separate allocation for domestic components means that it facilitates the domestic manufacturers too. The disparity between the quantum of allocation between the two processes is likely because of the fact that capacity addition is driven by developers rather than the domestic manufacturers and with capacity addition being the primary goal, this thought process could make sense.”

The Draft Methodology, released by the Solar Energy Corporation of India will implement projects under the Viability Gap Funding formula.

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