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The Ministry of Commerce and Industry is gearing up to avoid fresh trouble at the World Trade Organisation over India’s solar energy projects.
With the US criticising the first phase due to the Government’s insistence on high local content for the projects, the Department of Commerce is keen to ensure that the provisions of the second phase are more in line with the norms laid down under the multilateral pact.
The Department now wants the Ministry for New and Renewable Energy (MNRE) to share the draft of the bid documents for the next phase with it so that they are compatible with WTO norms.
“The first time, the MNRE did not share its first phase draft with us. But now we have insisted that the draft be shown to us before finalisation as we have to face the music at the WTO,” a senior Commerce Department official said.
Sore point
The US has dragged India to the WTO for incorporating a local content requirement in the first phase of the Jawaharlal Nehru National Solar Mission, which it claimed was violative of the multilateral agency norms. The Mission, which seeks to promote use of solar energy and also build local capacities, made it compulsory for all investors to use solar modules manufactured in India and source 30 per cent of the inputs locally.
The MNRE will be inviting bids for 750 MW of grid-connected solar photovoltaic projects that would help light up over a lakh Indian households. The tender has, however, not yet been issued.
During Union Commerce and Industry Minister Anand Sharma’s recent visit to Washington, top US officials spoke against the domestic content requirement. At the WTO, the US has so far not shown any sign of establishing a WTO panel against India to judge its policies on sourcing.
An official from the MNRE said the general perception is that the US was still waiting for India to formally launch the second phase. “I think the US wants to see how much capacity the second phase leaves open and then react,” the official said.
India’s stand
India has defended the norms saying, since the power will be purchased by an arm of public sector NTPC, it qualifies as a Government purchase, that is exempt under the Agreement on Trade Related Investment Measures rules.
The US, however, is determined to stop India from extending the domestic sourcing norm to solar thin films (exempt so far) in the second phase, as American companies are major suppliers of thin films for solar projects in the country.
richa.mishra@thehindu.co.in
amiti.sen@thehindu.co.in
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