India and the U.S. are unlikely to reach a settlement on the trade dispute concerning the imposition on domestic content requirements (DCR) on solar modules in India by todays deadline imposed by the World Trade Organization (WTO), a top U.S. trade official has said.
Speaking to Reuters, U.S. Trade Representative Michael Froman said that conversations between the two nations were still ongoing, and that it is at the "U.S.s discretion" whether the WTO extends the deadline or not.
Filed in 2013, the Obama administration successfully argued that Indias laws on DCR created as part of the countrys National Solar Mission to promote not only the development of solar but also Indias domestic industry violated global trade rules. The WTO sided with the U.S., but also accepted an appeal by the India government. Thus, India has been allowed to maintain the ruling for up to two years.
However, final WTO decision was expected at the end of January, but was delayed indefinitely, with both parties pursuing settlement talks, evidently to little effect.
According to reports in the Indian media, the WTO is likely to settle in favor of Washington, but officials at the global body are remaining tight-lipped while talks are still going on behind the scenes.
After the first WTO delay was announced, consultancy firm Bridge to India told pv magazine the DCR accounts for less than 5% of total module demand in the country, and stressed that the ruling had not delivered the "long-lasting support to domestic solar manufacturing" that officials would have hoped.
Whether or not the ruling will prove injurious to either U.S. module manufacturers or the Indian domestic industry is increasingly moot the DCR is a symptom of unwieldy government practice, believes Bridge to India.
In Delhi, there is confidence that a compromise may be struck whereby Indian manufacturers can receive subsidies for solar projects built by state-backed entities, thus appeasing parts of the domestic landscape while playing by agreed global trade rules.
However, the issue remains sensitive in India, with one senior government official, speaking to Reuters anonymously, stressing: "We cant just depend on imports for setting up of planned 100,000 MW of solar power generation. Local companies will have to get a share as we want to strengthen domestic manufacturing under Prime Minsiter Modis Make in India program."
Earlier this week, Indias energy minister Piyush Goyal said that the country was working on a new manufacturing policy for solar that could see India boast 10 GW of solar production capacity within three to four years.
"Chief ministers of states have assured me they will look to promote solar manufacturing," Goyal said. "Domestic manufacturing in India would be cheaper than anywhere in the world."