Indian solar market observers have downplayed the likely impact of a World Trade Organization ruling against local content policies in the country’s flagship solar programme.
Indian business newspaper Live Mint today reported that the WTO has ruled against India in a long-running dispute instigated by the US over the inclusion of domestic content requirements (DCR), which require some projects awarded contracts under India’s JNNSM national solar mission to use locally produced cells and modules.
India’s government has also offered financing of up to INR10 million (US$152,000) per megawatt to implementing agencies who place orders with domestic manufacturers to set up PV projects.
The US claimed that the DCR discriminates against foreign players looking to access opportunities in India and therefore breaks global trade agreements.
WTO members are not meant to impose national content requirements that discriminate against foreign products and rules dictate that governments must also treat imports on a par with domestically manufactured products. Thus the new ruling will require the Indian government to level the playing field for both foreign and domestic manufacturers of solar panels.
An anonymous ministry official told Live Mint that the commerce ministry received the ruling last week. It was also reported that India is likely to appeal against the ruling, which could give the country a two-year reprieve from having to implement the programme.
Jasmeet Khurana, senior consulting manager at analyst firm Bridge to India, told PV Tech that the ruling would not have a long-term impact on either manufacturing or PV deployment in India, which is targeting 100GW of solar by 2022.
While Khurana said the ruling does have a direct impact on several ongoing and planned project allocations to private developers in India, which may cause delays, the DCR was only earmarked to account for a small percentage of central government-allocated projects, Khurana said. Furthermore, projects being developed by public sector companies, such as state utility National Thermal Power Corporation (NTPC), can continue to procure domestic cells and modules.
Khurana said the WTO ruling would also put on hold new local manufacturing plans of some manufacturing companies that were reliant on the DCR as part of their strategy. However he noted that for these manufacturers to scale up significantly, they would need to be globally competitive and not rely on the DCR.
He added: “Sound plans for manufacturing in India could not have depended on DCR.”
The US first lodged its complaint in February 2013, and the WTO was forced to set up a dispute settlement panel in May 2014 after the US made a second request.
In the meantime, India dropped a separate investigation into alleged dumping of solar equipment by foreign players, including those from the US, in August last year. That investigation had threatened to sour relations between India and a number of countries eyeing the opportunities there for their domestic solar players.
In February this year, the WTO dispute panel then prepared to hear the US complaint over India’s domestic solar panel manufacturing.
Meanwhile prime minster Narendra Modi’s government officially approved the hugely ambitious ramping up of its national solar target to 100GW by 2022, up from just 22GW.
The new WTO ruling contrasts with a visit to India in January by US president Barack Obama, which saw a number of advances in the two countries’ clean energy partnership, including a pledge by Obama to invest US$2 billion of US Trade and Development Agency money in Indian renewable energy projects.
The ruling also comes as the Indian government seeks to support manufacturing in India, with prime minister Narendra Modi last year introducing a ‘Make in India’ initiative to attract foreign investment and boost India’s manufacturing industry.