Solar row: India hopeful of pact with US this week

India hopes to reach a mutual understanding with the US on the contentious issue of domestic sourcing conditions in New Delhi’s solar energy programme by February 24, when the third extension given by the World Trade Organisation (WTO) to both to settle the matter expires.

Failing a settlement or another extension request by the US, which is the aggrieved party, the WTO may publicise a dispute panel’s ruling on the matter which favoured Washington. However, if no extension is given New Delhi has the option of going in for appeal.

“Both countries have agreed to the broad changes that India will have to make in its sourcing and procurement rules to align them with WTO requirements. But, there are some details that are still being worked out. We hope to reach an agreement by February 24. If not, we may seek more time,” a government official told BusinessLine .

A WTO dispute panel, in a verdict that has not been officially published, ruled in August last year that stipulations in India’s Jawaharlal Nehru National Solar Mission (JNNSM), mandating that a portion of photo-voltaic cells and modules used for solar energy generation under the programme be sourced locally, violated the principle of ‘national treatment’.

It rejected New Delhi’s argument that the sourcing was part of government procurement, which does not fall under the ambit of WTO rules, as the power produced under JNSSM would be bought by an agency of the public sector company National Thermal Power Corporation. However, things seem to have changed between the two countries, with the US now being more accommodating and understanding India’s offer.

“New Delhi and Washington have been in talks on how existing rules for producing and selling solar energy under JNNSM need to be changed to ensure that local content requirement is imposed only on projects where it can be established that the power produced is used by government entities,” the official said.

While the JNNSM aims to add 100,000 MW of solar power by 2022, the local content requirement is only for 8,000 MW for rooftop and land-based projects where the government provides a subsidy.

“An agreement is yet to be reached on the nature of proof that is required to be shown to establish that power is being consumed by government entities,” the official said.

The WTO has already thrice delayed the publication of the report on requests made by the two countries. The last extension was given on February 17.

US Trade Representative Michael Froman had told the media last week that the two countries were still engaged in conversations. “It’s too early to tell whether we’re going to have an agreement or not,” he said.

Interestingly, environment groups such as Greenpeace USA, and Friends of the Earth had earlier urged the US Trade Representative to drop the challenge as it would hamper India’s efforts to build a domestic solar energy and hurt efforts to combat climate change.

COMMENT NOW