Solar projects: India hopes to meet WTO deadline on sourcing norms

Amiti Sen New Delhi | Updated on January 11, 2018

New projects not to have local sourcing clause, on which WTO had raised objections

India is hopeful of adhering to the World Trade Organisation’s year-end deadline for removing the compulsory domestic-sourcing clause in its national solar energy generation programme, as all ongoing projects are likely to be complete by then, a government official has said.

“The Ministry of New and Renewable Energy is in regular touch with all power producers under the programme, and is confident that all ongoing projects will be implemented by December,” the official told BusinessLine.

Fresh projects under the third phase of the Jawaharlal Nehru National Solar Mission (JNNSM) will not have the local-sourcing regulation that the WTO has ruled against, the official added.

The US, after a long-winding discussion with India, had decided to give the country 14 months to implement the WTO’s verdict. Since the trade organisation’s Dispute Settlement Body’s decision, confirming that the local sourcing requirement in the JNNSM flouted WTO norms, was adopted on October 14 2016, India has time till December 14, 2017, to implement it.

“We do not expect any trouble this time like we did in the poultry case, where action was not taken for almost a year after the lapse of the WTO deadline,” the official said.

Local players to be hit

The JNNSM, which aims to add 100,000MW of solar power by 2022, ran into trouble four years ago when the US dragged India to the WTO for a provision mandating that power producers have to source a part of solar panels and modules for their projects from local producers.

The US argued that the provision discriminated against foreign producers of solar panels and modules.

With the government not going in for any new projects because of the WTO decision, India’s fledgling domestic industry of solar panels and modules manufacturers is likely to take a hit as competition from imported items, especially from China, is stiff.

One relief could be in the form of anti-dumping duties. The domestic industry has submitted a proposal to the government for imposition of anti-dumping duties on solar panel imports, on the ground that they are priced lower than the prices charged in the local markets of the exporters, and is causing injury to domestic producers.

Published on July 13, 2017

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