India flays US request for trade sanctions over solar panels

India on Monday refuted US claims of discrimination against foreign suppliers of solar cells and modules saying India is fully compliant with global trade rules and that the US request for sanctions against India for alleged protectionism in the solar industry is an invalid request.

The United States had fought hard against India's alleged discrimination against the US and other solar gear manufacturers and won, but the benefits are being reaped by countries like China. The US, however, continues to pursue its case against India in the hope of the country further opening up its market and allowing free entry for its products.

A statement issued by the commerce ministry said India had tweaked rules to comply with WTO rulings and that the US demand for punitive action against India was not a valid request.

India said the United States, on the other hand, had skipped legal steps and not followed correct WTO procedures, leaving India severely prejudiced.

The US move comes in the backdrop of India's trade regulator, Directorate General of Anti-Dumping and Allied Duties (DGAD), initiating safeguard duties on solar cells, mainly imported from China, in December.

The DGAD initiated a safeguard investigation on solar cells on a complaint filed by solar representative body Indian Solar Manufacturers Association (ISMA) on behalf of five producers - Mundra Solar PV, Jupiter Solar Power Limited, Indosolar Limited, Websol Energy Systems Limited and Helios Photo Voltaic Limited.

The DGAD had, in a December notification, said, "The application has been examined and it has been found that prima facie the increased imports of the PUC have caused and are threatening to cause serious injury to the domestic industry of products that are like and directly competitive to the PUC. Accordingly, it has been decided to initiate an investigation through the issue of this Notice."

Most of the solar modules imported into the country come from China, but several consignments are now held up because customs officials have demanded reclassification of some consignments that allegedly contain "electric motors and generators" that attract 7.5 per cent duty. Now classified as "diodes, transistors and similar semi-conductor devices" these attract nil duty.

India is a late entrant in the solar power game, but it is catching up rapidly. It announced its national solar programme in 2011.

As conventional means of electricity become scarce, world powers struggle to be at the top of the game of renewable energy, and seek a major share of the business.

The United States moved the WTO in 2013 alleging that US solar exports to India fell by 90 per cent as India discriminated through mandatory local purchase requirements, which the WTO also found to have been against WTO rules.

India told the WTO last week that it might impose temporary emergency tariffs on solar cells, modules and panels amidst a spike in imports.

Under the WTO framework, a member country can impose safeguard duty if the increased quantity of imports is either an absolute increase or an increase relative to domestic production, which is causing serious injury or a threat of serious injury to the domestic industry. 'Serious injury' is defined as a significant overall impairment in the position of a domestic industry.

Reports quoting C Narasimhan, president of the Indian Solar Association, said that up to 2,000 solar module containers are now stranded at four major ports. Narasimhan said that "Port disruptions like this will hamper the country's progress towards achieving the target of 100 GW in installed solar capacity by 2022.''