WTO solar ruling may affect manufacturers in short term

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With WTO appellate body ruling against India stating that its PPAs with solar firms were “inconsistent” with international norms, Mercom Capital Group today said this will affect manufacturers in the short term which are overly dependent on the DCR market.

The World Trade Organisation (WTO) upheld its earlier ruling and has rejected India’s appeal against domestic content requirements (DCR) for manufacturing solar cells and modules. It also agreed that India’s localisation rules discriminate against US manufacturers, the multi-lateral trade body said in a statement.The result was not a surprise to anyone in the industry, it added.

“The DCR policy has always been contradictory — the government doesn’t want cheaper imported panels, but wants solar power at the lowest possible price. Locally-manufactured panels for DCR projects cost 10-20 percent more, and interest in these higher-cost projects has waned,” Mercom Capital Group CEO Raj Prabhu said in a statement.

“In the short term, this will affect manufacturers which are overly dependent on the DCR market. In the long term, the effect should be minimal as DCR projects are a small part of the projects auctioned. Manufacturers now have clarity and can adjust their strategy accordingly in order to compete.”

Currently, there is a pipeline of 925 mw of solar works to be auctioned under DCR. In a setback to India, WTO’s appellate body upheld the ruling of a panel which stated that the government’s power purchase agreements (PPAs) with solar firms were “inconsistent” with international norms.

In April, India had appealed against WTO panel ruling to this effect. The US had filed the complaint before the global trade body alleging discrimination against American firms.

The US had last week claimed victory over India at the WTO wherein it had challenged the local content requirement by the Indian government in solar panels.


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