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Even as the government gears up for another round of fighting at the World Trade Organization (WTO) for its domestic content requirement (DCR) policy under the National Solar Mission (NSM), the low capacity of Indian solar manufacturing could be a long-term handicap for India.
The current installed capacity of Indian solar cell manufacturing is around 1,386 Mw, of which less than 30 per cent is operational. "India's annual demand for solar cells is close to 4,000 Mw, but the operational capacity is just 200 Mw. With the government scaling up targets, domestic manufacturers are nowhere close to meeting this demand," said a renewable energy sector analyst in Delhi.
Close to 75 per cent of Indian solar power projects are built on imported cells from China and the US.
The US filed a case in WTO in 2012 against the domestic content requirement guidelines of the first phase of NSM. Under the stipulated guidelines, solar power project developers were supposed to source 30 per cent of the required equipment from domestic manufacturers.
When the US and some Indian project developers condemned this, the government gave equal shares of projects under the second phase for development from domestic and foreign content.
The Indian government also delayed the official response to the WTO in 2013 as the case was pending with the ministry of commerce after the ministry of new and renewable energy (MNRE) had given its submission.
"The MNRE would still stand by its position that around 15 to 20 per cent of the projects would be built on domestic content. Earlier it was 50 per cent and we have brought it down. We will file a plea again and any amendment in the policy will be only if we lose the case," said a senior MNRE official.
Currently, under the new mission guidelines, separate schemes are earmarked for domestic manufacturers. The 1,000 Mw of solar projects to be built by central PSUs are mandated to be built on indigenous solar cells, and 50 per cent of the projects to be tendered out by Solar Energy Corporation of India would be based on domestic cells.
According to industry estimates, Indian solar panels are 30 per cent costlier than those manufactured in China, the US, Taiwan and the European markets.
IS THE FUTURE BRIGHT?
US-WTO-INDIA SOLAR SAGA
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First case filed in 2012 by the US in WTO alleging DCR to be anti-competitive policy
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It was put on back burner post criticism from the US clean energy NGOs, including Greenpeace International
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JNNSM Phase II saw around 32% projects choosing domestic content
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US solar companies feared decline in exports
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US filed second case against JNNSM at WTO alleging threat to their exports in 2013
