U.S. worried about ‘Make in India’ rule

Suhasini Haidar

January 19, 2015 

Kerry had raised the issue at Vibrant Gujarat Summit

A co-operation agreement between India and the U.S. on “clean” or renewable energy, set to be one of the highlights of President Barack Obama’s forthcoming visit to India, has run into U.S. concerns over the government’s ‘Make in India’ plan.

According to officials, U.S. Secretary of State John Kerry, during his visit to the Vibrant Gujarat summit, brought up the worries over the government’s push for use of indigenous technology, calling it the new “make in India law”.

In particular, sources told The Hindu, the U.S. administration is irked over the government’s announcement of a series of 1,000MW “grid-connected solar PV power projects” that has a “mandatory condition that all PV cells and modules used in solar plants set up under this scheme will be made in India.

The announcement, made on December 18 last year, came amid the ongoing dispute at the World Trade Organisation (WTO DISPUTE DS456), where the U.S. has complained against India over the Jawaharlal Nehru National Solar Mission’s ‘domestic content requirement’ (DCR) for solar cells and solar modules in projects that it awards.

India maintains that U.S. subsidies on solar products threaten Indian manufacturers, and the domestic solar industry has accused the U.S. of “dumping cheap outdated technology” on India.

The WTO composed its panel in September 2014, but even as the matter over the UPA government’s ‘domestic content requirements’ was being decided, the NDA’s emphasis on “Make in India” has raised new questions from the U.S. administration.

Speaking to The Hindu, Renewable Energy Minister Piyush Goyal, who met with Mr. Kerry in Gandhinagar, said he was confident of “ironing out the creases” with the U.S. officials, while maintaining that India was committed to its recently announced target of 100,000MW solar power capacity by 2022.

“We are going ahead with our new renewable energy policy regardless of who will invest in it,” Mr. Goyal said.

Push for indigenous tech could stall investments: U.S. officials

Indian and U.S. officials are discussing the announcement of a multi-billion dollar fund to invest in Indian solar and wind power during President Barack Obama’s visit, with an understanding that the business generated would benefit U.S. companies in the field.

“Given where India is today, and the pace it wishes to develop, it should not focus on making in India, but on taking technology where it gets it,” said one senior U.S. official to The Hindu.

In 2014, India’s installed solar power capacity was at about 2,600 MW, and the increase to 100,000 MW (or 100 GW) will require an estimated $100 billion a year for the next five years for production and $50 billion a year for transmission and distribution costs, much of which is expected from the United States.

While Mr. Kerry’s specific objections were to the policy on renewable technology, officials say the U.S. has expressed all-round unease with ‘Make in India’ in other spheres of bilateral trade as well.

When U.S. Under Secretary of State Catherine Novelli met with Communications and IT Minister Ravi Shankar Prasad in Delhi last week, she made a specific mention of the problems with the policy, saying “the constraints of global supply chain must also be understood while promoting ‘Make in India’.”

According to an official press release issued after the Novelli-Prasad meeting, Mr. Prasad “assured the Under Secretary that if U.S. companies are investing in India, they will be treated on a par with the Indian companies.”