The United States and India have agreed that December 14, 2017 will be the last day for domestic content requirement (DCR) category.
According to the World Trade Organization (WTO) Article 21.3(b) of the ‘Understanding on Rules and Procedures Governing the Settlement of Disputes,’ the United States and India have agreed that the reasonable period of time for India to implement the recommendations and rulings of the Dispute Settlement Body in the dispute ‘India – Certain Measures Relating to Solar Cells and Solar Module’s’ shall be 14 months from October 14, 2016, the date of adoption of the settlement body recommendations and rulings. Accordingly, the reasonable period of time expires on December 14, 2017.
The Ministry of Finance recently turned down a Rs.200 billion (~$3.1 billion) Ministry of New and Renewable Energy (MNRE) plan to support domestic solar equipment manufacturers with incentives and subsidies, which would have helped them compete against low-cost equipment imported from China.
An MNRE official told Mercom, “Now that the finance ministry has shot down MNRE’s plan, we are looking at other viable options to support module manufacturers in the country.” The MNRE official also confirmed that after December 14, 2017, no DCR category tenders will be issued in India.
Mercom previously reported that the DCR policy was always at risk of running afoul of WTO rules, but the government kept pushing it to protect local manufacturers. It was always a balancing act – protect local manufacturers and pay a higher tariff, or let developers purchase modules from abroad and bring tariff rates down to save the government and consumers millions on power purchase costs.
Indian solar manufacturers face tough price competition from foreign manufacturers, especially Chinese. Mercom previously reported that the Indian Solar Manufacturers Association (ISMA) filed a new anti-dumping petition against solar imports from China, Taiwan, and Malaysia with the Directorate General of Anti-Dumping (DGAD), Ministry of Trade and Commerce, requesting levy of interim duties on importers. The Ministry of Trade and Commerce has yet to accept or send official notification regarding the petition, which was filed on June 5, 2017.
According to Mercom’s India Solar Manufacturing Tracker, installed capacity of domestic cells and modules in the country is estimated to be 3 GW and 9.1 GW respectively, while operational capacity of solar cells and modules is 2 GW and 6 GW respectively as of June 2017.