The finance ministry has rejected an ambitious Rs 200 billion plan to prop up local solar equipment manufacturers with incentives and subsidies to help them withstand the flood of Chinese imports, said a source close to the development.
The domestic industry is concerned about rising imports of solar equipment, which rose 38 per cent to Rs 214 billion in 2016-17, accounting for 90 per cent of the solar cells and modules used by Indian solar developers.
The ministry for new and renewable energy (MNRE) began working on the policy soon after an appellate body of the World Trade Organisation (WTO) upheld a complaint made by the US against the ‘domestic content requirement’ component in India’s Jawaharlal Nehru National Solar Mission in September last year.
The solar mission had a provision by which a part of India’s solar capacity target had to be met using locally made solar panels and modules, which the US maintained contravened three separate WTO agreements to which India was a signatory.
The September decision was the third time the WTO had upheld the US view, with India having appealed the earlier two decisions in appropriate forums. The renewable energy ministry thus began looking for other ways to support domestic manufacturing which would be consistent with WTO requirements.
That such a policy was in the offing was confirmed by energy minister Piyush Goyal at a media briefing following a Cabinet Committee on Economic Affairs (CCEA) meeting in February this year.
