Economy

Govt to support domestic solar industry

M Ramesh Chennai | Updated on January 22, 2018

Tarun Kapoor, Joint Secretary (Solar), MNRE

May make up for losing the buy-local rule case at WTO

Public sector companies may bring the sun out for the domestic solar manufacturing industry.

“We are committed to supporting the domestic solar industry,” said Tarun Kapoor, Joint Secretary (Solar), Ministry of New and Renewable Energy. “We will find some ways of doing that,” Kapoor told BusinessLine recently.

India on the backfoot

This assertion comes against the backdrop of India losing its case at the World Trade Organisation, against a mandatory buy-local rule, called ‘domestic content requirement’, or DCR.

Under the DCR rule, the Ministry reserves a slice of the market for the domestic industry, making it mandatory for those who put up specified solar projects to use India-made cells in their plants.

The US complained against this rule to the WTO and won. Asked for a comment on what India would do next, Kapoor said the WTO ruling had not yet come out officially, and he did not wish to comment on the basis of media reports.

However, he stressed that the Centre would continue to support the domestic industry.

Not a big deal?

While Kapoor did not spell out the “means” of protecting the domestic industry, sources note that it wouldn’t be a big deal for the Centre to ask public sector undertakings to use locally made cells in their solar projects.

They recall how the Centre in May 2014 had refrained from slapping anti-dumping duties on solar cells from the US, China, Taiwan and Malaysia, but assured the domestic industry that they would get support from PSUs.

India has close to 1,400 MW of cell capacity and about 2,900 MW of module capacity (cells are used to make modules), which can be easily absorbed by PSUs. Large PSUs such as NTPC, ONGC and Coal India, and departments such as the Defence and the Railways, intend to put up several gigawatts of solar plants.

In an e-mailed response to BusinessLine, Rhone Resch, President and CEO of US body Solar Energy Industries Association, observed that there are “a whole host of WTO-compliant incentives that India could rely on to help nurture its domestic solar manufacturing base”.

SEIA has welcomed the WTO decision, saying “global trade rules clearly prohibit localisation measures”.

‘PSUs, major drivers’

HR Gupta, Managing Director of IndoSolar Ltd, a member of the Indian Solar Manufacturers’ Association, believes that PSUs are “major drivers” of solar installations in the country. “They have land and access to capital,” he says. Pointing out that many other countries, “ironically including the US”, have a buy-local rule in some form or the other, Gupta observes that not supporting local manufacture would lead to a geo-political risk.

“Eighty per cent of solar manufacture would be in the hands of two countries — China and Taiwan,” he said.

India has a large solar programme and the year 2016-17 alone would see fresh installations of over 10,000 MW; largescale imports would then mean bloated payments outgo, warned Gupta.

Published on September 07, 2015

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