According to reports, after US, now it is India that is contemplating moving World Trade Organization’s (WTO) dispute settlement body on renewable energy.
India has alleged that the US is offering such renewable energy sector subsidy programmes for local content requirements which is making the entry of Indian companies difficult and are in violation of global trading rules.
In the report that has been filed to WTO’s Subsidies and Countervailing Measures Committee on April 18, India has named the four states of Connecticut, Delaware, Massachusetts and Minnesota specifically where such a programme is on to promote local firms there.
Thus, India has sought an explanation from the US government. India has said that it is “concerned” over such type of subsidy programmes because they are in complete violation of the TRIMS (Trade Related Investment Measures) Agreement of the WTO.
Some of the leading Indian solar photovoltaic (PV) module manufacturers such as Tata Power Solar and Moser Baer have told Business Standard about the difficulties in penetrating the US market due to the support given to its domestic manufacturers.
Ajay Goel, chief executive officer (CEO), Tata Power Solar said that the US government offers a variety of incentives to its companies to protect them from foreign firms. “Preferential treatment is given to US manufacturers, due to which we have not been able to make much inroads there. We have a bunch of investments which are on hold because of this.”
Another leading Indian firm Moser Baer had to quit US as it found the country to be “unviable” for doing business because of “several fiscal incentives given especially by US’ Department of Defense to the locally made solar panels”. But it did not face any problem in Europe and Japan.
“Over a period of time we realized that many states in the US are promoting schemes providing fiscal or other benefits with respect to the renewable energy products linked to the use of their local content. By giving varied incentives for use of their local content, a large number of the states in the US, made it unviable for us to do business there,” Deepak Puri of Moser Baer highlighted.
India, in its report, has also asked US to furnish details to provide details “as to which of the state or regional or local level renewable energy programs provide subsidies including incentives or additional incentives or rebates or credits, contingent upon compliance of domestic content requirements such as equipment manufactured or principally manufactured in certain parts of the state or specific%age of manufacturing or assembling to be done in a particular region or manufacturing to be done by companies having significant presence in a particular region or using domestic feedstock, etc.”
India has also sought clarification from the US government on the various state and regional level renewable energy programmes that provides incentives in the forms of rebates and credit to domestic solar equipment makers.
Earlier this year in February US had moved WTO against India on similar grounds. It had said in its complaint that the Indian government is offering subsidies to its local companies for solar cells and solar modules under the Jawaharlal Nehru National Solar Mission, which is hampering American companies. Now, Japan and Australia have also joined the consultation.