Seeking a sizeable pie in India’s fast emerging solar energy market, the American solar industry has asked it to remove the trade barriers which discriminate against US solar exports.
Testifying before a Congressional committee, Solar Energy Industry Association Vice-President John Smirnow alleged that India’s local content requirement “discriminates against US solar exports and, thereby, provides an unfair competitive advantage to India’s domestic solar manufacturers’’.
With some of the best solar resources in the world and the cost of solar continuing to decline, India’s solar sector is poised for explosive growth, providing an important export opportunity for US solar manufacturers, he told lawmakers.
However, India’s growing use of an industrial policy discriminates against US solar exports, thereby providing an unfair competitive advantage to India’s domestic solar manufacturers, Smirnow had said yesterday during the Congressional hearing on ‘A Tangle of Trade Barriers: How India’s Industrial Policy is Hurting US Companies’ convened by the Commerce, Manufacturing, and Trade Subcommittee of the House Energy and Commerce Committee.
Local content needs
While local content requirements may provide some protection for domestic manufacturers, they also stifle innovation, limit a country’s access to next-generation technologies and increase costs, not to mention the fact that local content requirements are explicitly prohibited by global trading rules, he explained.
“Returning to the specifics of India’s solar industrial policy, the national solar mission is divided into three phases. Under the first tranche of phase one, India required that eligible products — projects based on crystalline silicon technology — that’s the other half of the solar panel industry — versus thin film,” he said.
“That is where the US has a technological advantage — in this first phase India required that one half meet a local content requirement for cells, and solar cells are the heart of a solar panel for this technology,” Smirnow said.
“So while US companies could sell cells into India or they could sell modules but they weren’t able to sell cells, US-origin panels were thus barred from competing. For the second tranche of phase one, India broadened this local content requirement to mandate that national solar mission products use only crystalline silicon cells and panels manufactured in India, a significant lost opportunity for US exports,” he alleged.
Looking forward, the US solar industry is concerned that India will expand its local content requirement yet again to cover thin film technology, effectively targeting hundreds of millions of dollars of US exports. “Our only hope is that the US Government’s recent decision to initiate a WTO case against India will eventually cause India to reverse course,” he said.
“The US-India dispute follows on the heels of a recent WTO finding that Ontario, Canada’s local content requirement for solar goods, substantially similar to India’s, violated Canada’s WTO obligations. In response, Canada has indicated that the solar programme will be brought into compliance with the WTO decision, which we presume means that Canada will remove the local content provision,” he said.
Smirnow said that India should follow Canada’s lead and remove the local content provision from its national solar mission.