Government to float 12 GW solar energy scheme which may help domestic manufacturers

Amidst the US-India WTO dispute a new 12 GW energy scheme which has been deftly crafted to mandate local manufacturing without violating WTO’s trade rules, is in the final stage of approval and will help local industry in India sustain the blow of cheap imports.

The scheme worth INR-8,000 cr will be a significant boost for Indian manufacturers who are also waiting for the imposition of a safeguard duty on solar components. The scheme has already been cleared by the Expenditure Finance Committee which is a part of the Department of Expenditure in the finance industry.

The government can mandate the use of locally manufactured components as a part of the scheme since the power is for the government’s own consumption. The scheme will have an implementation period of four years by 2022, with a minimum manufacturing capacity of 3 GW of solar cells per year which is the current size of the domestic solar cell market in India.

In the recent developments of the safeguard case, the Directorate General of Trade Restrictions recently recommended up to 25% safeguard duty on imports from China and Malaysia for a period of two years.

Initially, in February 2013 the United States requested conversations with India concerning certain measures of India relating to domestic content requirements under National Solar Mission for solar cells and solar modules. The appellate body post listening to both parties plea gave the verdict that DCR measures were inconsistent with WTO non-discrimination obligations.

MNRE to Implement scheme: 1 GW solar Projects by PSU’s and GOI Organizations

Ministry of New and Renewable Energy (MNRE) in its latest notification on 18th Jan 2014, has given guidelines for the implementation of a scheme for the development of 1000 MW of grid connected Solar Power Projects by Central PSU’s and Govt. of India organizations and various central and state schemes with Viability Gap Funding under batch-V Phase-II of JNNSM in a span of 3 years. The Central Financial Incentive (CFA) required is estimated to be 1000 crores.

Solar Energy Corporation of India (SECI) will handle the scheme on behalf of MNRE. SECI will be given a fee of 1% of the VGF disbursed for handling the funds and managing the Scheme.

The Ministry is promoting domestically manufactured solar cells and modules, knowing that the domestic manufacturing capacity is facing tough competition from the foreign players like china and US, which are selling the cells and modules at significantly lower price. The Indian manufacturing capacity is also not enough to meet the demand, which has been a concern for the govt. that resulted in dropping the anti-dumping duties proposed by director general of Anti-dumping.

The Govt. has now taken new steps to promote the domestic manufacturing by giving specific project capacities under certain schemes.

The Scheme Document can be accessed here.

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