Solar mission: US wants India to do away with local sourcing norms in new projects

The US is mounting pressure on India to do away with the condition of local-buying of components in the next batch of solar power projects under the country’s ambitious national solar mission.

In a formal consultation held last week at the World Trade Organisation (WTO), the two countries could not reach an understanding on the validity of the domestic buying condition in the projects granted so far under the mission.

“The US has not yet disclosed whether it will ask the WTO to set up a dispute settlement panel for a full-fledged fight with India on the issue.

But, it is certainly trying to intimidate us so that the domestic sourcing clause is not included in the second batch of projects in the second phase of the mission,” a Government official told Business Line .

“What we could assess at the meeting is that it will see how many American companies can qualify for the second round of projects, and then may be work out its action plan,” the official added.

India plans to roll out the next batch of projects after the general elections. The capacity of projects under the second batch is yet to be finalised.

The US argument against the local buying clause in the solar projects under the Jawaharlal Nehru National Solar Mission launched in 2010 is that it discriminates against foreign manufacturers of components and thus violates WTO norms.

It lodged its first complaint against India early last year after 950 MW solar projects were granted by the Ministry of New and Renewable Energy in two batches, with a condition that all solar modules for the projects have to be purchased locally.

The second complaint was made last month after the Ministry granted projects totalling 750 MW under the first batch of the second phase. Although India has tried to make peace by restricting local sourcing norms to just half the projects in the second phase, the US is miffed by the fact that its scope has been expanded by including thin films.

India has so far argued at the WTO that since sourcing of power generated under the solar mission is done by a Government-owned agency, the purchases are, in fact, Government procurement which does not fall within the purview of the multilateral agency.

Only members of the WTO’s Government Procurement Agreement, a pluri-lateral agreement involving a handful of countries, are governed by the rules on Government purchases.

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