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U.S. Commerce Secretary Gary Locke complains to India about Solar Import restriction says Wall Street Journal

AsPanchabuta has reported a couple of months back, the U.S. was aggressively trying to push  India to lift solar import restrictions on Jawaharlal Nehru National Solar Mission.

The mandatory use of domestic content for utility scale grid connected solar power  is a topic that has witnessed a lot of debate and there have been strong views on both for and against the same sometimes from two group companies each on one side of the same corporate house like Tata BP Solar for the domestic content requirement and Tata Power against the requirement saying it impedes them from choosing the best availabile equipment and vendor that suites their requirements.

The local domestic content requirements mandates that solar panels will have to be produced in India for the first year and solar cells will also have to produced from the second year.There is also talk that this will be extended to solar inverters as well.

Panchabuta had reported recently, that the government may postpone mandatory use of locally made photovoltaic cells in solar power projects being set up under the national solar mission to speed up projects and allow access to the best-available technology although the move would be a blow to local suppliers such as Moser Baer, Tata BP Solar, KSK Surya and IndoSolar may suffer.

Just days after this, FICCI had cautioned against any move to do away with domestic content requirement in solar energy sector.

This immediately led the ministry to issue a clarification, as reported by Panchabuta, that stated, “Under the Jawaharlal Nehru National Solar Mission, the Government had announced a policy to introduce domestic content wherein 30% domestic content is mandatory for the solar thermal power projects in the first phase of the Mission. Solar Photovoltaic (PV) grid power projects are to be selected in two stages. In the first stage 150 MW capacity projects are being selected, where the crystalline silicon modules should be manufactured in the country. However, for the second stage of selection of about 300 MW capacity projects, it is mandatory to use domestic solar cells and modules. There is no move to defer this policy. “

Last month, Ron Summers of lobby group Indo-US business council was pushing for the removal of technology limitations in Solar.

Once again according to the Wall Street Journal today, U.S. Commerce Secretary Gary Locke said he conveyed a “message of great concern” to Indian officials Monday about the country’s restrictions on imports of solar-power technology, rules that are making it difficult for American firms to enter one of the world’s fastest-growing solar-energy markets.

Locke Complains to India About Solar Imports

But an Indian regulation that goes into effect in April will bar those firms from importing any foreign-made solar panels—the technology that converts sunlight into electricity.

Foreign solar-panel makers can only get a piece of the action if they set up local manufacturing plants in India through joint ventures, something few U.S. companies have expressed interest in.

“We’re very concerned,” Mr. Locke said in an interview with The Wall Street Journal. “We think that’s the wrong way to go. We think there are different ways in which you might try to achieve the objective of supporting more manufacturing within India.”

He said the U.S. is proposing alternatives like tax incentives or subsidies that would encourage U.S. and other foreign firms to set up solar-panel production facilities in India without shutting out their exports.

The above mentioned regulation does not apply to those Solar PV projects that are using the thin-film technology and as Panchauta understands a number of US vendors are in advanced stages of discussion with  Indian developers who are choosing that option for their projects under the current Solar Mission due to cost and financing reasons apart from  technology.

…………..Indian Commerce Minister Anand Sharma, addressing the conference alongside Mr. Locke after the two officials met, said making quick policy changes is difficult. “There is a broad-based consensus which is required in a democracy as you evolve new policies,” he said.

The solar-energy spat between the U.S. and India is especially important, because the sector has been touted in the past by both sides as a promising area of collaboration. A spokesman for India’s Commerce Ministry confirmed Mr. Locke raised the solar-energy issue in talks Monday with Mr. Sharma but declined to comment on whether India has any plans to tweak its policy.

Mr. Locke said India’s policy will cut off the country’s solar-power plant developers from using state-of-the-art solar-panel technologies.

“Governments all around the world in combating climate change and becoming more energy independent really need to embrace the very best technology,” he said in the interview. “You certainly don’t want to be adopting technology that’s obsolete or breaking down or is difficult to operate and maintain a few years from now.”

In speaking to various developers in India, Panchabuta understands that the only concern that Indian developers have expressed is on the cost front  but none what so ever on the technology or its efficieny. As Panchabuta readers are aware the current panels being manufactured in India by the Indian suppliers are all currently being exported to the European markets.

U.S. firms such as First Solar Inc. and SunPower Corp. are among the world’s largest suppliers of solar panels, along with Chinese and European firms. India has two major solar-panel producers, Moser Baer India Ltd. and Tata BP Solar India Ltd., a joint venture of Tata Power Co. and BP Solar International Inc. Those firms will get the lion’s share of orders from India’s national solar program.

Spokesmen for the Indian firms had no immediate comment. Tata-BP has said previously that it produces highly efficient solar panels and that the import restrictions will help jumpstart India’s solar technology industry.

In an interview last December, Indian Commerce Secretary Rahul Khullar— the top bureaucrat within the Commerce Ministry—said there was little chance that India would reverse its policy, and accused the U.S. of a double standard, saying it hasn’t objected as forcefully to similar import restrictions in China’s wind power sector.

Indian developers have expressed their concern that the cost of funding in case of domestic panels from the Indian banks seems to be rather  exhorbidant in their discussions and that the Indian vendors and the various organizations including the ISA have not looked at a comprehensive solution to help the developer.

 On the other hand, the developers claim that certain projects backed by foreign panel manufacturers are attracting huge amounts of both equity investments and inexpensive EXIM bank funding through partnerships apart from institutional funding from multilateral agencies and these are already being showcased as success stories in the national and international forum.

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