According to reports, nearly 10 days after the US filed a dispute against India at WTO over discriminating against its producers in the second phase of the solar mission, India has readied a strong counter against the US for providing export credits to its solar products like thin film panels and preferential treatment for purchase of power produced from US-made solar products in 13 of that country’s states.
Firmly maintaining that India’s solar mission was fully WTO-complaint, Indian government officials pointed out that there were significant concerns over importing ‘thin-film technology’ for solar panels ‘overwhelmingly’ from the US.
The US has alleged that in phase II of the Jawaharlal Nehru National Solar Mission (JNNSM), the domestic content requirement was expanded to cover thin film technology, which was exempt from such requirements under phase I, which will likely cause even greater harm to the US producers than under phase 1 as thin film comprised a majority of the solar product exports to India.
“One or two of the major US producers of thin films have got export credits from the US government which is encouraging an inflow of older technology into India. Moreover, the cost of products sourced from the US and China are suspiciously lower than the known production cost,” a ministry of external affairs official said.
Moreover, there are over a dozen states in the US that have schemes in place to offer preference to purchase of power produced by US-made solar products.
“It is India that has a case to file against the US in the WTO on solar energy products instead of the other way round,” the official added.
The commerce department is examining the evidence of 13 US states which follow equally restrictive policies on solar power.
Thin film panels made from cadmium telluride are environmentally damaging and hence, banned in a few countries and is not even a preferred choice worldwide.
Thin film panels are known to be less efficient in power generation than crystalline technology. Due to the heavy imports from the US, thin film usage in India is estimated to be over 55% of the total installed photovoltaic capacity, against just 10% globally.
US has alleged that the domestic content requirements discriminated against US solar cells and modules by requiring solar power developers participating in phase II to use Indianmanufactured solar cells and modules instead of US or other imported equipment.
However, India counters that claim based on facts. In phase 1 of the solar mission, of the 140 mw capacity generated under batch 1 and 340 mw generated under batch 2, 25 mw and 140 mw of power was produced from US-made modules and cells. “US firms have actually been a major beneficiary of the solar mission,” the official pointed out.
Power procurement from all grid-connected solar power projects is carried out by central government agencies, which is subsequently bought by the state distribution companies to sell to consumers.
“There is no level of subsidy offered in selling power to the distribution companies, so basically the procurement is for government use, which is fully WTO compliant,” the official added. India has not signed the government procurement agreement of the WTO.
In India, there is no local sourcing requirement for any power purchased by the state government, the official maintained. “Of the 2,180 megawatts of solar plants commissioned in India, about 1519 mw worth of energy comes from the state government schemes.”
The department of commerce is currently examining the consultation document and preparing a reply. The countries would get 60 days to resolve the matter and if they fail to do that, the US could request the establishment of a WTO dispute settlement panel.