India warns U.S. about dumping investigation in solar trade spat

NEW DELHI Tue Feb 11, 2014 6:53pm IST

1 of 2. A man cleans panels installed at a solar plant at Meerwada village of Guna district in Madhya Pradesh June 18, 2012.

Credit: Reuters/Adnan Abidi/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - India said on Tuesday it was investigating U.S. policies supporting solar panel makers, the latest move in an escalating row over renewable energy that has worsened already strained ties between the two countries.

The Obama administration said on Monday it was filing a second case at the World Trade Organization over the domestic content requirements in India's solar programme, which aims to ease chronic energy shortages in Asia's third-largest economy.

U.S. Trade Representative Michael Froman said making Indian solar developers use locally made equipment discriminated against U.S. producers and could hinder the spread of solar power.

Indian Trade Secretary Rajeev Kher said his country, too, had raised complaints about the United States at the WTO.

"We have clear evidence of 13 odd (U.S.) states which follow equally restrictive policies as they challenge against us," Kher told reporters. "So, we are examining those policies."

Kher said India was also probing possible dumping of solar equipment as well as China and a few other countries.

The trade spat between India and the United States follows the recent arrest and strip search of a female Indian diplomat in New York in connection with visa fraud charges.

The arrest prompted retaliatory measures against U.S. diplomats in India and plunged U.S.-India relations to their lowest point since India tested a nuclear device in 1998. With general elections due by May, politicians are under pressure to show that they do not pander to U.S. interests.

As coal and gas shortages and populist tariff regimes hobble the performance of thermal power stations, Indian solar equipment manufacturers such as Moser Baer India Ltd (MOSR.NS) and Welspun Energy want to expand their capacity.

India has argued its solar policies are legal under WTO government procurement rules and last year imposed anti-dumping duties on Chinese and Indonesian solar equipment firms.

In addition to the United States, China and Indonesia, Indian solar power producers import equipment from Malaysia and Germany, industry officials said.

LOOKING LOCALLY

The United States has twice in the past year sought a consultation at the WTO - the first stage in a dispute process that can lead to sanctions - over India's Jawaharlal Nehru National Solar Mission, which aims to double the country's renewable energy capacity by 2017.

New Delhi last year invited bids from firms to set up projects with a capacity of 750 megawatts to further expand the solar programme. The government, however, said locally made content had to be used to generate half of this new capacity.

The U.S. International Trade Commission is scheduled to hold a hearing into complaints of trade barriers erected by India on Wednesday and Thursday.

U.S. environmental groups have urged the Obama administration to back off from any WTO action, arguing that building up India's solar power industry will help it cut high greenhouse gas emissions.

But the administration has come under growing pressure from lawmakers and business groups to take a tougher stance on perceived Indian protectionist measures and intellectual property rights abuses by Indian drug companies.

There are 14 past or current WTO cases between India and the United States, whose bilateral trade in goods measured $63.7 billion last year, not including the latest case.

"This action is a reflection of the growing stress in the India-U.S. trade relations and both sides are expected to take a tough stance," said D.H. Pai Panandiker, president of New Delhi-based think tank RPG Foundation.

"The two nations have large markets and I hope they will be able to sort out these irritants."

(Additional reporting by Krista Hughes in WASHINGTON; Frank Jack Daniel in NEW DELHI and Prashant Mehra in MUMBAI; Writing by Sumeet Chatterjee; Editing by Miral Fahmy)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Barack Obama in India

Reuters Showcase

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

RBI Loan Rules

RBI Loan Rules

RBI relaxes overseas loan recast rules   Full Article 

E-commerce Firms

E-commerce Firms

Amazon, e-commerce rivals fuel commercial property boom in India  Full Article 

Growth Forecasts

Growth Forecasts

Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll.  Full Article 

Uber is Back

Uber is Back

Uber back in Delhi; govt says must await approval.  Full Article 

Markets at Record

Markets at Record

Sensex rises to record after ECB stimulus programme.  Full Article 

Pharma Sector

Pharma Sector

Ipca Labs hit by FDA ban on plant for standard violations.  Full Article | Related Story 

Forex Reserves

Forex Reserves

India FX reserves at record high as RBI fortifies defences  Full Article 

QE for Euro Zone

QE for Euro Zone

ECB launches 1 trillion euro rescue plan to revive euro economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage