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Business News/ Industry / Energy/  India raises the stakes in trade battle against US
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India raises the stakes in trade battle against US

NTPC has called bids for developing solar power projects in which only Indian manufacturers can participate

File photo. NTPC, which has a 17% share in the country’s electricity generation mix, with an installed power generation capacity of 43,128 MW, plans to generate 3,300 MW from solar energy. Photo: BloombergPremium
File photo. NTPC, which has a 17% share in the country’s electricity generation mix, with an installed power generation capacity of 43,128 MW, plans to generate 3,300 MW from solar energy. Photo: Bloomberg

New Delhi: India has raised the stakes in an ongoing trade battle with the US at the World Trade Organization (WTO), with state-owned NTPC Ltd calling bids for developing solar projects in Rajasthan, Telangana and Madhya Pradesh from domestic manufacturers.

“Only domestic manufacturers can participate in this NTPC tender," an Indian government official said, requesting anonymity.

Interestingly, the bids called by India’s largest power utility for developing 750 megawatt (MW) of solar photovoltaic projects in these states involving an investment of around 6,000 crore was called on Saturday, a day before India and the US issued the statement that spoke of support to India’s ambitious green energy programme during US President Barack Obama’s visit.

Obama’s visit comes amid a trade battle between India and the US at WTO, where a dispute settlement panel has been established to hear US complaints against India’s domestic content requirements on procurement of solar cells and modules under the Jawaharlal Nehru National Solar Mission programme (JNNSM).

The panel, which will be chaired by former New Zealand trade envoy David Walker, will begin its proceedings on 3 February when the US will make its first submission as to how India violated WTO commitments by implementing the JNNSM.

The bid documents will be available from 4 February. According to the terms of the tender, these 250 MW packages will have five blocks of 50MW each and will comprise of two-stage bids, techno-commercial and price.

“Solar will form an important part of our energy mix," said an NTPC executive who also didn’t want to be identified.

As part of its strategy, India has rolled out an ambitious campaign to promote solar energy through organizations under the ministries of defence and home such as the Indian Army, and central public sector units (CPSUs) such as Indian Railways, NTPC, NHPC Ltd and Coal India Ltd, providing them with grants on the condition that they source equipment from domestic manufacturers.

According to the plan, reviewed by Mint, the government will provide financial support of up to 1 crore per MW to the implementing agency for setting up large solar capacities by placing orders with domestic manufacturers. It requires an investment of around 8 crore per MW for setting up solar photovoltaic power projects.

This comes in the backdrop of Prime Minister Narendra Modi’s Make in India programme, aimed at attracting foreign investments and turning India into a manufacturing hub.

In its dispute notification, the US has charged India with imposing national content requirements and denial of national treatment for solar cells and solar modules. While the US has also complained that India provides subsidies to its domestic producers involved in the manufacture of solar cells and solar modules; the Indian government has termed the scheme WTO-compliant.

Queries emailed to the spokespersons of NTPC and India’s ministry of new and renewable energy remained unanswered till press time.

NTPC, which has a 17% share in the country’s electricity generation mix, with an installed power generation capacity of 43,128 MW, plans to generate 3,300 MW from solar energy. The utility plans to add 14,038 MW during the 12th Plan period (2012-17) and has budgeted an ambitious capital expenditure target of 1.5 trillion. It has set itself the target of becoming a 128,000 MW power producer by 2032.

India and the US on Sunday agreed to work closely on efforts to promote solar energy.

“We very much support India’s ambitious goal for solar energy and stand ready to speed this expansion with additional financing," Obama said after his meeting with Modi in the national capital on Sunday.

Mint reported on 24 January about the US statement of support which may help it attract more investment to fund projects to produce solar and wind power. India has substantially revised an earlier solar energy target of achieving 20,000 MW of capacity by 2022 to 100,000 MW. It plans to put in place 60,000 MW of wind power capacity by then. Both targets would require around 10 trillion of investment if they are to be met.

“Prime Minister Modi emphasized India’s ongoing efforts to create a market environment that will promote trade and investment in this sector. President Obama welcomed India’s ambitious solar energy goals and encouraged India to continue its efforts to increase trade and private investment in this sector. President Obama conveyed the potential availability of US government official financing in this area, consistent with its policies, to support private sector involvement for those entities in contributing to India’s clean energy requirements," the joint statement said.

There has been growing interest from US firms to set up manufacturing facilities in India. US-based SunEdison Inc. announced this month that it plans to build a solar photovoltaic manufacturing facility in India in a joint venture with Adani Enterprises Ltd with an investment of around $4 billion. Also, First Solar Inc., which builds large solar farms, mainly for utilities, is exploring an opportunity to set up manufacturing operations in India.

India’s National Action Plan on Climate Change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020. Of India’s installed power generation capacity of 255,012.79 MW, renewable power has a share of only 12.42%, or 31,692.14 MW.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 29 Jan 2015, 12:14 AM IST
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