WTO Archives - Solar Love!

India is looking at ways to support domestic manufacturers of solar cells and modules as it aggressively increases installed capacity.

According to media reports, the Ministry of New & Renewable Energy plans to auction 20 gigawatts of solar power capacity with a clause that would give preference to companies that have manufacturing facilities. The ministry may opt for several different tenders with a cumulative capacity of 20 gigawatts.

Details of the terms and conditions of these tenders will be out once the Solar Energy Corporation of India (SECI) issues the tender. However, this could be the make-or-break moment for solar equipment manufacturers in India.

The Indian government has attempted several measures to make sure that Indian manufacturers benefit from the huge capacity addition targets.

Failed Incentives

The Indian government did manage to auction a few hundred megawatts of capacity under the Domestic Content Requirement (DCR). During the early days of the National Solar Mission, some tenders had a clause that required developers to use only Indian-made solar modules.

Neither the central nor state governments are allowed to float such tenders anymore after the US successfully challenged DCR and won a ruling from the World Trade Organisation in September 2016.

The MNRE also proposed a financial support scheme for solar manufacturers. The ministry planned a $3 billion relief package for manufacturers. The plan included various financial incentives, including subsidised interest rates. The plan, however, was disapproved by the Ministry of Finance.

Duties on Imported Modules

India first considered levying anti-dumping duties against imported solar cells and modules in 2013. The Ministry of Commerce and Industry, after internal investigations, proposed anti-dumping duties to Ministry of Finance. The new government that came to power in May 2014 rejected these recommendations.

Last year, fresh investigations were launched into imports from China, Taiwan, and Malaysia. These investigations were recently terminated after the Indian Solar Manufacturers Association (ISMA) withdrew its petition. ISMA will likely submit a fresh petition soon.

The Indian government also levied custom duties on solar modules for a brief period. These duties were recently lifted following re-classification of solar modules. Imposition of safeguard duties has also been recommended by a government agency.

Major Players

Such a tender will likely benefit the largest solar cell and manufacturers in India that also have project development capabilities. These include Adani Energy, which already operates India’s largest solar power project, and Tata Power Solar, which acquired around 1 gigawatt of solar and wind energy capacity from Welspun Energy.

India has received objection from WTO members over another of its decision regarding its solar power policy.

European Union was joined by Japan to criticize India’s decision to impose interim a safeguard duty on imported solar cells. The Indian government, which is still investigating whether to impose a safeguard duty on imported solar cells, had issued an order to impose a preliminary 70% safeguards duty.

An EPC contractor challenged the order in a court and was awarded a stay for few weeks. That stay has now expired and legal proceedings will likely move forward soon. The government department investigating the matter has yet to produce a final report or order.

The 70% interim duty is not only being opposed by the WTO but the Indian government was also cautioned against such a move by its own Parliament. A committee in the Indian Parliament had warned the government not to impose such a high duty on solar imports as it may lead to a rise in tariffs and a slowdown in capacity addition. There are no signs that the government has heeded that advice.

On the WTO front it is surprising that the proposal to impose a safeguards duty was opposed by the EU and Japan. Neither of these countries have any major solar equipment exports to India. They are, however, a major source of funding to solar projects.

Earlier this year, while announcing a major debt funding agreement with an Indian bank, the President of the European Bank for Reconstruction and Development had also urged Indian not to impose such duties.

China, which supplies nearly 90% of the solar modules and cells used in India, warned the Indian government against levying any anti-dumping duties on solar equipment. The Indian government had recently prematurely ended an anti-dumping investigation at the request of the Indian Solar Manufacturers Association, but a fresh investigation is expected may be launched soon.

Earlier, India lost a major battle at the WTO when in September 2016 it was forced to terminate the Domestic Content Requirement (DCR) program. The program mandated project developers to use Indian-made solar modules. India’s Ministry for New & Renewable Energy was forced to issue a directive to all states not to auction any projects under the DCR program after India lost a legal challenge to objections raised by the United States.

WTO

India Plans 20 Gigawatt Solar Tender To Circumvent WTO Domestic Content Restrictions

Failed Incentives

Duties on Imported Modules

Major Players

India, WTO Members Spar Over Safeguard Duties On Solar Cells