US requests WTO consultation over Indian solar DCR07. February 2013 | Top News, Applications & Installations, Global PV markets, Industry & Suppliers, Markets & Trends, Investor news, Trade cases | By: Becky Beetz
The U.S. has requested World Trade Organization (WTO) dispute settlement consultations with the Indian Government regarding India’s solar photovoltaic domestic content requirements (DCR). Industry association SEIA has come out in support of the move.
On February 6 – just two months after India initiated anti-dumping investigations into imported solar cells from China, Taiwan, Malaysia and the U.S. – U.S. Trade Representative Ron Kirk announced that the U.S. is challenging India’s photovoltaic DCR under its national solar policy, the Jawaharlal Nehru National Solar Mission (JNNSM), launched in 2010.
The policy – Phase I Batch I states that projects must use crystalline modules made in India, while Phase I Batch II states that projects must use domestically-made crystalline photovoltaic cells and modules; subsidies are also available for using local equipment – "appears to discriminate" against U.S. photovoltaic cell and module manufacturers, stated Kirk in an announcement released.
The statement continued, "These forced localization requirements of India’s national solar program restrict India’s market to U.S. imports. Tackling these barriers is a top priority of the Obama Administration."
Specifically, the U.S. says that India’s solar policy appears to be inconsistent with its obligations under the WTO agreements, including: Article III of the General Agreement on Tariffs and Trade 1994 (GATT 1994); Article 2 of the WTO Agreement on Trade-Related Investment Measures; Article 3 of the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement); and Article 5 of the SCM Agreement.
According to the WTO dispute settlement process, the U.S. and India are now encouraged to seek a solution to the issue. If it is not resolved after 60 days, the U.S. can then request the establishment of a WTO dispute settlement panel.
Kirk concluded, "The United States strongly supports the rapid deployment of solar energy around the world, including with India. Unfortunately, India’s discriminatory policies in its national solar program detract from that successful cooperation, raise the cost of clean energy, and undermine progress toward our shared objective."
U.S. Solar Energy Industries Association (SEIA) president, Rhone Resch stated that SEIA fully supports the government’s move. He added that DCRs are a "growing trend within the global solar industry which must be reversed.
"We are hopeful that today’s action by the U.S. government will encourage not only India but other countries contemplating the imposition of localization barriers to focus instead on WTO-consistent government support measures," he said.
Recently, the WTO ruled that Ontario’s renewable energy FIT, which includes a domestic content requirement, breaches WTO rules. The decision was made following a complaint lodged by Japan and the European Union in September 2010 and August 2011, respectively. A panel report is currently said to be under review.
JNNSM, Phase II
According to an article by Bridge to India in the February edition of pv magazine, it appears likely that a DCR will also be included in Phase II of the JNNSM.
"For the allocations to be made by the central government under the upcoming phase two of the National Solar Mission (NSM) (2013-1017), it is likely that a domestic content requirement (DCR) will be implemented in some form. Various options such as a blanket DCR on cells and modules used in projects and DCR as a percentage of the total plant cost have been proposed in the draft of the policy for phase two of the NSM," wrote Jasmeet Khurana.
In an interview, Hari Manoharan, a consultant with RESolve Energy Consultants told pv magazine that India’s Ministry of New and Renewable Energy (MNRE) has laid out six different options for DCRs in the Phase II draft, including:
- For all PV projects, cells and modules produced in India shall be used;
- Price preference for domestic manufactured cells/ modules;
- Percentage of domestic content in cost terms (say 50%) for both PV and thermal technologies;
- Percentage of cells manufactured in India;
- Some batches with 100% domestic content requirement; and
- For thermal technologies material equivalent to 50% of supply costs (excluding land, taxes, erection, financing, soft costs, etc.) should be manufactured in India during phase 2.
Currently, thin film equipment is excluded from India’s DCR; a loophole, says India’s Centre for Science and Technology (CSE), being exploited by the U.S. and which is "distort[ing] the market completely in favor of U.S. companies."
Indeed, the center launched a scathing attack on U.S. manufacturers last August, claiming they are "ruining" India’s domestic solar manufacturing industry by taking advantage of the US$30 billion Fast Start Finance Fund. It added that nearly 60% of the modules installed in India are thin film.
Responding to the claims, Lawton King, a spokesman for New York City-based Ex-Im Bank told pv magazine at the time that Indian customers are buying U.S. thin film technology, because it is superior in quality. "What ultimately drives demand for U.S. solar equipment," he commented, "is the quality, price and after-sales support offered by American exporters." First Solar, one of the biggest exporters of thin film to India also denied dumping product on the market.
David Robinson, president of Havertown, Pennsylvania-based Senergy Solar Corporation, added that quality has been, and continues to be, the main issue. "Maybe if India’s manufacturers used better solar cells in their panels, domestic project managers would want to buy them. They use broken cells – and I’m here to say it. That’s the reason why they are losing deals to U.S. companies," he stated.
India is, however, said to be considering incorporating the technology in its Phase II DCR, which would impact the U.S. solar industry, since most of its solar exports to India comprise thin film.
Hari Manoharan added, "I am going to assume that thin film technologies would also fall under the DCR this time round (thin film was exempted under phase 1) even though this has not been mentioned explicitly."
Gopala Krishnamurthy from Bangalore
Friday, 08.02.2013 09:13
This is funny. USA has its own local content requirement in its PV Program. If India also wants to have a similar local content stipulation for projects for which it is providing subsidy why should USA object?
Choose between a digital and print subscription from pv magazine publisher Solarpraxis AG’s online shop!
- 3307 views
First Solar completes initial phase of America's first solar plant to sell electricity on spot market3194 views
- 2731 views
- 2512 views
- 2613 views
Want to publish your press releases for free? Simply log in or register, enter the information you want to appear and we'll publish it for you!