THE SOLAR WAR

Trade dispute over domestic content requirement between India and the US continues to grow
 More than 70 per cent of the solar power projects in India are built on imported content. There is a need for India to support its own manufacturing capabilities as domestic equipment capacity is inadequate to meet the demands of the country’s ambitious solar power mission. In a government’s bid to encourage domestic solar cell industry, India has imposed dumping duty on solar panel imported from the US, China, Malaysia and Taiwan.
In a reflex action, the US has filed a complaint in the WTO against India’s domestic content requirement (DCR) under the country’s Jawaharlal Nehru National Solar Mission (JNNSM). US claim that the DCR violates WTO agreements such as national treatment principle and agreement on trade related investment measures. The WTO has set up a dispute settlement panel to examine a complaint by the US against India’s domestic content requirements under the country’s solar power programme. The question arises how the ongoing US-India solar tussle will affect the solar power industry in India?
Commenting on the issue Ketan Mehta, Managing Director, Rays Power Infra says, “The Indian government is trying to endorse and enhance the Indian GDP. This would be getting worse if not sorted out soon, as India’s planning to install 20 GW within the next decade to provide uninterrupted power supply.”
ImpactLike every coin has two sides there are two ways of looking at this issue, the first anti-dumping duty could be one of the major concerns that solar power industry is facing and may have an adverse impact if implemented. Second, the association claims that anti-dumping duties would create five lakh jobs as Indian manufacturers expand their capacity and encourage domestic players who have either shut down their manufacturing facilities or have idled over half of their capacity to promote their own manufacturing capabilities.
Mr Mehta says, “In the current scenario, the domestic market is not well equipped and does not meet the standards of growing requirements. The capacity is very poor and whatever little exists is already tied up with the national solar mission. If anti-dumping duty is to be imposed the solar segment of the renewable energy sector will come to a standstill, which will make the already capital intensive solar power sector more unviable than before.”
He further adds, “We will face a massive setback in inflow of funds from investors as they will be reluctant to invest due to huge initial capital investment that this sector demands. Things will worsen if government imposes this additional anti-dumping duty which would result in doubling up the investment cost.”
With reference to media reports, if anti-dumping duties were to be implemented the solar panel imported from US would incur an additional $0.81 per KW which would result in increased investment cost.
Vineet Mittal, Vice Chairman Welspun Renewables Energy Pvt. Ltd. says, “Efforts of India to use manufacturing sector and export for immediate economic rejuvenation and growth will suffer a setback since imposing anti-dumping duty at this juncture will have a retrograde impact on our international trade relationship in multilateral forums viz. WTO especially with countries like China, USA, Malaysia, Taiwan etc. that are our target countries for export.”

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