India made a sucker by US as America files WTO Protectionist Case against India even as Indian Solar Panel makers go Bankrupt
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February 13, 2013US files WTO Protectionist Case against India
US filed a case against India for domestic content rules in its solar federal policy despite American company First Solar having captured a majority of the Indian market. It is ironical that USA has filed a WTO case against India and not against France, Italy, Greece and Canada, which have domestic content rules to promote solar manufacturing by their domestic manufacturers. India’s government has never had much strategic sense unlike other countries. It shows how the US government is making a sucker out of the Indian state by preventing the country from imposing any possible future duties on import of solar panels. US solar companies can’t make a dent in big markets like China and Japan because of their implicit subsides and strong domestic manufacturers. India is the only other big solar market for US companies like First Solar (FSLR) and Sunpower (SPWR). So US have filed a case against “friendly” India to ensure that its solar companies survive. Note Indian states have no domestic content rules which now account for a majority of solar demand in India.
Indian government needs to desperately pull up its sock and improve governance. The Indian government is highly corrupt and indecisive. The lack of strategic thinking is glaring in this case where Indian solar manufacturing has already been decimated. I don’t know how US can file a WTO case against India while leaving countries like Canada out. This just shows that India is being made a sucker by the US government.
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The United States took the first step towards a full-blown trade dispute with India Wednesday on the solar power sector, the World Trade Organisation said.
A WTO statement said that Washington had requested consultations over what it claims is unfair support for India’s solar cell and solar panel producers.
Requesting consultations is the first move that WTO members must take before launching a full suit at the global body, which aims to ensure a level playing field in international commerce.
The WTO said that the United States alleged that India requires solar power developers to purchase and use solar cells and solar modules of domestic origin in order to be able to take part in the country’s solar energy programme.
“As a result, the US alleges, solar power developers, or their successors in contract, receive certain benefits and advantages, including subsidies through guaranteed, long-term tariffs for electricity, contingent on their purchase and use of solar cells and solar modules of domestic origin,” the WTO said.
First Solar captures 80% of the Indian Solar Market
First Solar has captured the lead marketshare in India’s solar panel market. This is quite surprising since First Solar’s competitive position is being eroded globally by Chinese crystalline solar panels which are cheaper and of higher efficiency. In fact First Solar has mostly stopped selling solar panels because they are no longer competitive. The reason for First Solar’s spectacular success in India is due to India’s solar subsidy policy JNNSM. The policy which was meant to support India’s domestic solar panel companies though a “domestic content” provision has ironically helped First Solar become the undisputed leader in winning most of the JNNSM projects. The reason is that JNNSM excludes thin film solar panels from the domestic content provision which means that solar developers can buy thin film technology from foreign companies. Given that the cost structure and scale of Indian solar manufacturers is clearly no match to that of the global solar companies, First Solar has benefited hugely.
Solar Companies in India face Hard Times
Solar Companies around the world are facing hard times with bankruptcies galore. Not only hundreds of small installers, erstwhile behemohts like Q-Cells have defaulted on debt and declared bankruptcy. So its not a great surprise that Indian solar companies which were never very competitive anyway are facing equally bad times. The biggest and oldest solar panel companies like Moser Baer and Tata BP Solar are facing survival questions. These companies have seen departure of top executives and are looking for CDR resolutions. Moser Baer which had invested hundreds of millions in investments into crystalline silicon and thin film solar is having difficulty in paying back its debt. The stock price has cratered to almost nothing as well. The company which had invested into exotic solar technologies as well as the mainstream has managed to fail everywhere . The company had even invested in a polysilicon startup as well as concentrated solar power technologies. It shut down its thin film equipment plant a year ago as Applied Materials the equipment supplier itself got out of the business. The company is now mainly into the EPC business. Other companies like Indosolar are also looking like a write-off. When the biggest solar panel companies like Suntech are themselves in such trouble, its a surprise that these companies are managing to produce anything at all.
India joins the Solar Wars
India has joined the solar panel wars starting it own anti dumping investigation into imports of Solar Cells imported from China, USA, Malaysia and Taiwan. The Ministry of Commerce has found evidence that these imports have led to damage of the local solar manufacturing industry. The Indian solar industry has been crying hoarse for quite some time now against the imports of cheap solar panels from USA and China. Despite the central subsidy JNNSM mandating use of local solar modules for projects, thin film modules have been exempt.
1 Comment
The heart of the US request for consultations is the charge that India does indeed have domestic content requirements, as a prerequisite to accessing the subsidies offered under the JNNSM. And the heart of your objection is that no such requirements exist. What am I missing here?