India to defend restrictions on solar equipment imports

India plans to defend its restriction on imports of some solar equipment against a US complaint at the World Trade Organization, saying panel makers such as First Solar have access to most of its market.

“We will give a reply,” Tarun Kapoor, joint secretary at the ministry of new and renewable energy, said in a phone interview. “Most solar projects in India are allowed to import. We have sufficient quantities open for competition.”

India has required about 10 per cent of new photovoltaic projects in the past year to use domestically made solar cells and modules. The rule violates international trade law and raises the cost of solar energy, US trade representative Michael Froman said yesterday in a statement.

It was the second complaint in a year lodged by the US against what it called India’s “unfair barrier to US exports” of solar components. The action deepens a global solar trade spat spanning three continents that has prompted the European Union to curb imports of Chinese panels, China to impose tariffs on US polysilicon, and US to levy duties on Chinese cells.

The latest dispute also threatens to further strain India- US ties frayed by the arrest of an Indian diplomat on visa-fraud charges involving her babysitter that triggered protests in the South Asian nation.

India is investigating claims from its domestic solar manufacturers that competitors from the US, China, Malaysia, Europe and Japan dumped solar cells, or sold them below cost. That is a separate case, and any decision to impose import duties would be made independently, Mr Kapoor said.

The US filed a complaint last February over similar import restrictions for solar projects awarded in earlier government auctions. India defended its position in a response to the WTO, and the US did not pursue the case, Mr Kapoor said.

A phone call and e-mail seeking comment from spokesmen at the US embassy in Delhi did not receive a response.

US-based First Solar said that restricting imports “slows down overall industry growth due to increased costs,” in an e-mailed response to questions. “India’s long-term interests will be better served by creating a stable policy environment that supports the broader growth of the industry value chain,” rather than focusing narrowly on the manufacturing of cells and modules.