India may have avoided a major confrontation with the United States at the World Trade Organization (WTO) with its decision not to impose anti-dumping duties on imported solar photovoltaic modules.
The Indian Ministry of Finance has rejected the proposal by the Ministry of Commerce and Industry to levy anti-dumping duties on imported solar PV modules, government sources have told Press Trust of India. This culminates long-standing demands by domestic solar PV modules manufacturers which claimed loss of business. Some of these manufacturers are under tremendous financial strain.
The Ministry of Commerce had proposed to levy duties ranging from $0.11 to $0.81 per watt on modules imported from the US, China, Malaysia and Chinese Taipei. The proposal did not find favor from other ministries within the government. The minister for transportation and the minister for coal, power and renewable energy were opposed to the such a levy, as they felt it would significantly increase the cost of solar power production, which is nearing parity with conventional power.
The Indian National Solar Mission was launched with a target to support domestic solar modules manufacturers. The mission has a target to install 22,000 MW of solar power capacity by 2022; a large majority of this capacity will be in the form of solar PV projects. During the first phase of the mission, about 600 MW solar PV capacity was commissioned with several of the projects using imported modules which came bundled in deals of cheap finance provided by development banks in the US, Germany and Japan. The Indian module manufacturers have been crying foul ever since.
Think tanks and consultancies have issued opposing research reports, claiming that the economy may lose millions of dollars in increased power costs or that favoring domestic modules would save millions in foreign exchange. The government seems to have taken a decision that would support the continuing trend of falling cost of solar power. The government, however, also plans to support the domestic manufacturers by having a separate category in the auctions where successful project developers would be obligated to use domestic modules. The tariffs for such projects are likely to be higher than projects using imported models due to the price differential.
Last year, the government auctioned 375 MW of solar PV projects that are obligated to use domestic modules. Indian manufacturers have started getting big orders for these projects. One of the leading manufacturers, Tata Power Solar, received an order to supply 100,000 modules to a 20 MW project by ACME Solar.
The US government has, however, objected to such an arrangement as it believe that this favors domestic manufacturers. The US government has taken the matter to the WTO. Hopefully, this latest decision provides the two countries enough room to negotiate a compromise.
Image credit: Tata Power Solar