Clean Energy Drive in Focus as India's Modi Prepares to Take Office

22 May 2014

The incoming Indian government under Narendra Modi has pledged to develop the country’s solar sector enough over the next five years that each household will be able to run at least one light bulb using such power.  The state of Gujarat, of which Modi was chief minister for over a decade, has been one of the leading regions in increasing the country’s solar capacity since its own scheme was established in 2009.

Recent data indicates that approximately one-third of India’s population of 1.2 billion still lacks access to electricity. Increasing the development of energy sources, including renewables, has thus become a growing policy priority for the Asian economy in recent years, both at the national and state levels.

In 2010, for instance, India established the Jawaharlal Nehru National Solar Mission (NSM) with the goal of deploying 20,000 megawatts of solar panels, which would in turn be connected to the grid, by 2022. Recent data places India’s current solar capacity at 2600 megawatts – a 56 percent increase from last year – with about half due to state policies.

Modi’s Bharatiya Janata Party, which won a landslide victory the country’s general elections last weekend, ran on a pro-development platform that focused – among other areas – on how to improve India’s clean energy generation capacity, particularly with regards to solar. The BJP has said it would build upon the Gujarat system, while adapting its approach to the need of different regions in India.

India considers anti-dumping duties on US, China solar imports

The push to increase the deployment of renewable energy both at national and global levels has fuelled questions of how governments can best achieve these goals – and be supportive of each other’s efforts to do so – without running afoul of international trade rules.

Indian officials are expected to confirm later today whether duties will be imposed on imported solar equipment from the US, China, Taiwan, and Malaysia, media reports say, after an investigation found evidence of alleged dumping from these countries.

According to Bloomberg Businessweek, the Director of India’s Ministry of Commerce and Industry has issued an official document stating that this alleged dumping has caused material injury to domestic manufacturers.

As a result, New Delhi could decide to impose duties on more than twenty Chinese and American solar companies that sell products in India. The investigation was concluded ahead of the 16 May general elections; what impact the polls’ result might have on today’s decision was not clear at the time of this writing.

First Solar, a US-based solar module manufacturer which also has manufacturing facilities in Malaysia, is among those cited in the probe. The company disputes the dumping claims, saying these do not correspond with its own data.

“We are disappointed with the preliminary findings made by the Designated Authority which are inconsistent with our own assessment of facts made as per WTO guidelines,” the company said in an emailed statement to Breaking Energy. “We disagree that we have dumped imports into the Indian market.  We are assessing our options and will pursue legal measures as necessary.”

Some analysts, however, have cautioned that duties would surely hurt the growth of the country’s domestic solar capacity – still a comparatively nascent sector for India – should these be imposed.

WTO panel to be established Friday in US-India dispute

Separate from the above-mentioned dumping probe, the US and India are currently facing off on solar trade at the WTO, with Washington formally challenging NSM’s local content requirements for solar modules and cells in February – its second complaint on the subject.

The US has said that, while it supports India’s efforts to increase its renewable energy capacity, this must be done in a way that does not give local products an advantage over their foreign equivalents. Otherwise, Washington officials warn, these measures could hamper the deployment of clean energy at the international level. (See Bridges Weekly, 13 February 2014)

Indian officials, in turn, have said repeatedly that their scheme is indeed in line with WTO rules, while noting their own concerns over US-based programmes.

In 2011, the US exported US$119 million worth of solar industry products to India, making the Asian country the US' second largest export market in this area. However, these numbers have fallen in recent years, which Washington has blamed partly on the local content requirements of New Delhi’s national scheme.

A dispute panel is expected to be established in the US-India case on Friday, at a meeting of the WTO’s Dispute Settlement Body.

ICTSD reporting; “Solar Market’s Latest Hiccup: India’s Anti-Dumping Move,” BREAKING ENERGY, 16 May 2014; “Modi to Use Solar to Bring Power to Every Home by 2019,” BLOOMBERG, 19 May 2014; “Gujarat’s solar success may shine on nation,” THE HINDU BUSINESSLINE, 18 May 2014; “India's hunger for energy: BJP plans solar power revolution,” TIMES OF INDIA, 8 April 2014; “India’s Solar Power Capacity Tops 2,600 MW,” CLEAN TECHNICA, 8 April 2014.

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