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India says US cannot point fingers on local input norm

According to reports, in a move to counter the US gripe against compulsory local sourcing for solar projects, India is digging up cases where American states have mandated domestic sourcing .

At a meeting earlier this week of the WTO Committee on Trade Related Investment Measures, India said water utilities in many US states — South Carolina, Pennsylvania, and West Virginia among others — have made domestic sourcing of ductile iron pipes and fittings compulsory for use in water projects.

New Delhi’s charges come two weeks after it sought clarifications from the US at a WTO subsidies committee meeting on local content requirements in renewable energy programmes in Michigan, California and Texas.

India’s arguments can play a decisive role in the case the US has lodged against India at the WTO for making it compulsory for all investors in programmes under the National Solar Mission to buy some of the inputs locally.

“It is appalling that the US has raised a dispute against India for local content mandate when it has been using it for so long in multiple areas. New Delhi has patiently prepared its case against all such instances and will now fire from all sides,” a Government official told Business Line.

Ironically, at the moment India does not have much commercial interest in the areas where the US has set local content norms, but removal of restrictions could open new vistas for business.

“We are mainly trying to point out to the US that we are not the only ones trying to encourage domestic industry through local content norms. It is hypocritical to point fingers at us when they are doing the same,” the official said.

India asked the US to explain how these measures could be considered consistent with the TRIMs Agreement that prohibits sourcing restrictions without ample justification.

Interestingly, the US has used the same argument in its case against India for domestic sourcing under the Jawaharlal Nehru National Solar Mission. The Mission, which seeks to promote use of solar energy and also build local capacities, made it compulsory under the first phase for all investors to use solar modules manufactured in India and source 30 per cent of the inputs locally.

India’s defence is that since the power will be purchased by an arm of public sector NTPC, it qualified as government purchase and was, therefore, exempt from the TRIMs rules.

The US, however, is determined not to allow India to extend the domestic sourcing norm to solar thin films (exempt so far) in its second phase as American companies are major suppliers of thin films for solar projects in the country.

“Once a larger debate on local content being mandated by various countries in different projects starts at the WTO, it will be easier for India to persuade the US to drop its case,” the official said. 

One comment

  1. Protectionist trade to support the local economy has been the Nationalism and must continue. While doing so, if some other country offers the product to destabilise other country’s economy by giving huge discounts (like China does) to avoid manufacturing capacity creation in the Country (India for instance), is the wrong practice.

    US and Europe, JAPAN have been adopting very wrong practice through low cost funds to promote their country products through EXIM or USAID, ADB / JBIC etc i.e FUNDED PROJECTS…..

    GRANTS AND AID was the culture for poor economies to prosper while giving business to large economies and this kind of business model is well known and AFRICAN COUNTRIES including pakistan are the beneficiaries and earlier INDIA did get Common Wealth funds / Grants…..

    When the Funding companies / Countries lost the business to local companies (when the local economy had improved and also when the local government along with people became aware including Human rights issues, ISO 9000 or 14000 barriers, Environment issues or such barriers), now, the Grants are getting reduced because many of these countries have started complying all such preconditions…..

    Now, EXIM is attractive in highly INFLATIONARY Country like INDIA, where the interest rates are high, hence, Charanka or Reliance Power company could see such inferior products with low cost funding either EXIM USA, CHINA or EUROPE. Is this not discretionary??

    Please read my article in ENERGETIC INDIA, which addresses the Interest subsidy, which is a low burden and also compels the promoter to buy good products to assure energy generation to avail interest subsidy for 10 to 12 years, thus, one can promote the locally manufactured items with responsibility. We can pay 5% more for local products, but, local companies are not competitive and want 10 to 30% premium, which no Project Developer will pay and why should they pay??

    Can Indian Government officials reply this Hypo-cratic Viability Gap Funding (or few call it as Election Fund), Capital Subsidy, Accelerated Depreciation which can’t make profit earning companies to pay the taxes and also not make them responsible to create the good quality assets??

    Interest subsidy will also eliminate the middle men commission, if implemented efficiently, and reduce the project costs by 20% (Read my article in Energy Blitz July, Aug 2012 issue and the link is available on

    By abolishing Accelerated Depreciation, Viability Gap Funding, Capital Subsidy, we can create level playing field to create new generation and first time entrepreneurs with mentoring in every taluka to develop large amount of solar power at a very cheap price.

    USA, Europe, AFRICA, Middle East and South East Asia can also learn from this by eliminating huge attorney fees to obtain the permissions and environment clearances, which the local government can arrange and then invite proposals form the new entrepreneurs to own 10 to 50 MW solar Power in every County of USA State……

    Only such countries will be successful, who understand to unlock the power of small, new entrepreneurs to develop infrastructure facilities with mentoring and funding support and not through short cut subsidies or tax rebates / credits to support large corporate cos, instead low cost funding with a open, transparent business model with financial numbers for uniform pricing through out the nation….. one nation one policy with COUNTRY FIRST concept….

    Someone was surprisingly mentioning that: What is ironical that in democratic countries like USA which allows Election Funding, we find only large companies getting benefits and no support to small entrepreneurs with transparent policies with financials to create large entrepreneurs with funding and mentoring….possibly a, high greed scene….. In the largest democracy- INDIA, the election funding, indirectly takes place through policies with last minute pre-qualification policy changes / criteria or Discretionary power or quota etc Subsidies or tax rebate policies with a hidden agenda… 2G, CWG, Coalgate, Renewable energy through VGF + AD etc…..oooops where in the COUNTRY FIRST Policy??

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