Domestic solar panels to get only EPC, subsidy-backed projects

Decision will help India's Solar Mission become WTO compliant

As India faces heat at the World Trade Organisation (WTO) for giving preference to domestic solar manufacturers in its renewable energy programme, the Ministry of New and Renewable Energy (MNRE) has made changes to the content sourcing policy. This comes at a time when the domestic solar manufacturing industry has sought safeguards and anti-dumping duty on import of solar panels from China and Malaysia.

In its latest communication to the industry, the MNRE has directed all states/Central PSUs to not take any “new projects with Domestic Content Requirement (DCR) under the developer mode”. Besides, replacement of old solar cells/modules from the domestic market would also not be exclusive to indigenous makers, as it would have to be an open tender, said MNRE in its notice dated January 12.

Anand Kumar, secretary, MNRE, clarified the CPSUs and states are open to call tender with DCR under the EPC (Engineering, Procurement & Construction) or contractor mode. “We want to be WTO compliant. The rules mention that government should be a procurer wherever domestic content is given priority. EPC mode is one such way. Other is through projects where any state subsidy is offered,” he told Business Standard.

CPSUs such as NTPC would be allowed to issue tender for solar project construction with the caveat that the private domestic developer should only be an EPC contractor and not power seller. Also, the new rooftop solar projects policy promotes use of domestic content with central financial assistance and subsidy.

Kumar said MNRE has floated the proposal to increase the amount of CPSUs projects to 13,000 Mw from current 1,000 Mw. “In addition to it, we would soon be out with the new domestic solar manufacturing policy which would link close to 20 Gw of power projects with indigenously manufactured solar cells/panels,” he said.

Till last year, 10 per cent capacity in each of the tender issued by the central government for solar power project was kept for domestic content sourcing. Earlier it was 50 per cent and was brought down after the first appeal made by the US in the WTO in 2014. Apart from this, major PSUs such as NTPC and Coal India have committed to build solar power generation capacity from domestic content.

The WTO ruling in September 2016 stated that solar projects which are to be taken up by the government, for the government, there should not be any commercial sale. India asked for a year’s time to close all the projects floated on DCR. The deadline expired in December 2017.

As the current status of the case stands, India has sent clarification that the Solar Mission is WTO complaint and none of the solar policies flout any trade regulations, said government officials. “There is no reason that we should be penalized. None of the guidelines in NSM flout any trade regulations,” said the official.