India is planning to move a counter application against the US government in response to the latter’s claim that India has subsidised domestic investors for the solar energy sector.
Commerce minister Anand Sharma said India would respond at the World Trade Organization (WTO) about the charges raised by the US Trade Representative Michael Froman. “India will respond adequately at the WTO,” Sharma told reporters at an event in Chennai.
While Sharma did not elaborate, it is understood the Indian government could challenge the Exim Bank support the US provides its manufacturers who bid for solar investment projects abroad.
Late on Monday night, (India time) Froman had issued a statement targeting what he alleged were domestic content requirements in the Indian solar mission. He said those discriminated against foreign solar manufacturers.
The USTR has asked for the WTO dispute resolution mechanism to be used as this requirement put in by India during Phase II of the Jawaharlal Nehru National Solar Mission, he alleged, affected about 10,000 US jobs.
But defending the Indian position, commerce secretary Rajeev Kher said “The US already had a consultation with us on solar domestic content and now they are challenging the second-phase. It is not a surprise. Our current policy is WTO compliant. We will defend it.”
A government source said the US accusations did not make sense since the local component requirement only affected the production of solar photovoltaic cells which accounted for only 50 per cent of the gross investment in the solar energy sector in India.
The source also explained that the solar mission of the Central government was only a part of the aggregate investments in the sector. The others were state governments and the private sector who had no reason to insist on local requirements.
India has already closed out investments of 375 MW in the first phase of the mission. It plans to add the same amount in the second phase of the national solar mission.
Kher pointed out that several US companies have also won contracts in the second phase. “You will notice that most of the contracts have gone to the American companies. They have participated in those bids and many of them have succeeded.”
Sharma said, “We are also very clear that India has to create domestic manufacturing capacities. India must have those capacities or we will end up importing for the rest of our lives”.
* The US Trade Representative has alleged that India’s National Solar Mission discriminated against foreign manufacturers by insisting on domestic requirements and would move an application at the WTO
* India would challenge the US action by bringing up the issue of US Exim Bank support for its manufacturers who bid for solar projects overseas