Solar Energy – JNNSM, Solar Cities, Solar Pumps, etc.

[op-ed snap] A solar gear shift


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: WTO, DCR scheme, trade remedies, etc.

Mains level: Complement this newscard with our previous newscards on the same issue of Solar Power.


Special attention from the Indian Government

  1. The 2018 Economic Survey identifies renewable energy as a champion sector under the Make in India 2.0 programme

An important issue

  1.  India currently meets almost 90% of its annual requirement of solar panels through imports (mainly China), impeding the growth of a nascent domestic solar manufacturing sector

Some important questions

  1. Policy support for the solar sector is increasingly focussed on domestic manufacturing, both in the form of capital subsidies and considerations of trade regulation
  2. However, are these interventions the right signals to send to an already uncertain solar sector?
  3. Do they comply with the global trade regime?
  4. And will they keep our renewable energy (RE) ambitions on track?

Examination of the above questions
FIRST: Issues related to trade remedies

  1. Implementing trade remedies that have anti-competition implications has become commonplace, with clean energy becoming its newest victim
  2. Trade remedies are trade policy tools that allow governments to take remedial action against imports which are causing material injury to a domestic industry
  3. Trade remedies are attractive because they create tangible short-term benefits such as job creation, reduction in trade deficit, and higher local tax collection
  4. However, such a move would also result in higher tariffs and make solar power less attractive for the already financially strained and RE-sceptical utilities

SECOND: Compliance with the global trade regime

  1. It is vital that India remains compliant with the global trade regime
  2. Previous measures (for example, the domestic content requirement or DCR scheme) to assuage the concerns of the domestic solar manufacturers were challenged and overturned at the World Trade Organisation WTO
  3. The DCR scheme did not impose any restrictions on imported sources and only sought to secure an assured market for domestically manufactured panels
  4. Prioritising domestic goals without complying with international trade rules affects the much-needed stakeholder confidence required to achieve India’s clean energy target

THIRD: Inter-ministerial conflict

  1. India’s solar sector is currently caught in inter-ministerial cross-fire
  2. The Ministry of New and Renewable Energy (MNRE) has been grappling with issues posed by the MoF regarding:
    the re-classification of solar panels as electrical motors (the current classification is photosensitive semiconductor devices), imposing additional duties and cesses on importers
  3. An inter-ministerial committee headed by the MNRE must be constituted to coordinate moves among the MoF, the MoCI, the Ministry of Power, and the Central and State Electricity Regulatory Commissions

FOURTH: Need of a unified representative

  1. Developers and manufacturers need to voice their needs clearly and respond to policy implications in an unequivocal manner
  2. The industry needs one unified voice representing the key concerns of each stakeholder-category, without ignoring the broader interests of the sector

The way forward

  1. To get ahead in the solar race, India will need a comprehensive strategy on issues such as effective sourcing of critical minerals, investment in R&D, access to patient venture capital, and fiscal benefits for the industries of the future
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