Despite being a low income country with millions of unskilled workers, India imports large amounts of manufactured low valued added products from foreign countries, which could be easily made domestically. Stupid policies, red tape and high cost of land and capital has made India weak in manufacturing. The new government wants to really push manufacturing in India by giving incentives to both foreign and domestic players to set up factories in India. Defense, electronics, renewable energy, textiles, gems and jewelry are some of the areas that the government wants to aggressively push ahead.
However, pushing domestic manufacturing won’t be an easy task, given the sloth that affects Indian bureaucracy and the remnants of license raj. The government wants to substantially ease business operations by simplifying forms and regulations. Solar energy is one of the focus areas where the government wants to increase the installed capacity by 33 times in the next 7 years. In consonance with the increase in installed solar capacity, the government also wants to increase the solar domestic manufacturing which has been lying sick due to enormous imports from China and USA. While India rejected its own recommendations of high anti-dumping duties on imports of solar panels and cells, it has reserved a part of government tenders for domestic players. This has made USA file a case at WTO to be heard on 3rd February. Government owned public companies such as NTPC are also coming out with tenders for solar development in which only domestic manufacturers can supply equipment. This is a grey area since India has not agreed to be a party to government procurement agreement in WTO, which mandates a fair playing field for both domestic and foreign companies in government procurement of products and services.
USA wants to help India achieve its energy and climate change goals and has already pledged $4 billion in loans. But at the same time USA is not doing this for charity, it wants to promote its own companies such as First Solar and SunPower to export equipment to India. USA companies have not been able to compete in China or Japan. India is the only market where they have been successful, because of foolish Indian government policies and lack of domestic competition. They don’t want to lose such a huge market and will bring every kind of political and diplomatic pressure for India to allow imports. I think the Indian government is doing a good job by balancing both the demands of the domestic industry, as well as the interests of the consumers who want low energy prices.
The solar dispute hangs like wisp of a cloud over the growing friendship between India and the US; observers in India are watching what the US would do between now and February 3, when a dispute panel of the World Trade Organisation will hear the US complaint.
The Americans feel that India’s ‘domestic content requirement’ of the Jawaharlal Nehru National Solar Mission programme violates WTO rules. The DCR provision requires some of the solar power projects to be build using only India-made photo voltaic cells and modules. (Solar modules are made with cells, which are produced from polysilicon).
Google+State-run utility NTPC has restricted the building of three new solar power projects to domestic manufacturers, even as India pushes for overseas companies to lead fresh investments into a renewable energy drive.Only Indian companies will be allowed to bid for the projects, which will have a combined 750 megawatts (MW) capacity, a spokeswoman for NTPC said on Thursday.The spokeswoman declined to say why foreign companies were not able to bid, and stressed that Indian subsidiaries of foreign manufacturers would be free to participate in its future solar projects.
