Imported Solar Components In India “Criminal”

• Developers using imported solar cells and modules for government-backed projects rather than locally manufactured products face legal action in India
• Violators also threatened with forfeit of bank guarantees
• Developers could be blacklisted for 10 years
• In a related order, the government has removed a guideline that had limited the domestic content requirement to a portion of 5 GW of grid-connected solar power projects under a capital subsidy scheme for its National Solar Mission

In a Feb. 20 memo, India's Ministry of New and Renewable Energy (MNRE) threatened "criminal proceedings" against developers using imported PV cells or modules in violation of the government's mandate to use only domestic content. A day later, the agency effectively extended its domestic content requirement (DCR) to all MNRE-backed solar projects by removing a reference in a 2016 memo which had only limited the DCR to a portion of 5 GW of grid-connected projects.

According to MNRE's Feb. 20 memo, if a project developer backed by government subsidies continues to use imported solar cells and modules, the violation will be treated as "a criminal offence." The developer could be tried under the Indian penal code and blacklisted for 10 years with the forfeit of bank guarantees. The ruling includes disciplinary action against the officers of central and state government "public sector undertakings." The open-ended memo says "any other action" against violators could also be added. The memo does not clarify if this ruling affects projects currently approved or in a tendering phase.

"Apprehensions have been raised that the policy may be misused by way of mis-declaration and imported solar cells and modules may be used in DCR projects instead of domestically produced cells and modules," MNRE stated.

The MNRE memo was followed up on Feb. 21 with amended guidelines making the DCR more widespread. The DCR mandate in the original 2016 version had only covered "some quantity of power…depending on availability and price" of domestic cells and modules on 5 GW of state-backed projects. In the amended version, MNRE removed any reference to limits, meaning the DCR mandate most likely now applies to all grid-connected solar power projects receiving government subsidies – known in India as viability gap funding – under India's National Solar Mission (NSM).

The new rulings seem to mark a hardening of the government's push for DCR measures. Previously, India had been treading cautiously on DCR use since the US won at World Trade Organization in the case it filed against India in September 2016 (see Final WTO Verdict In India-US Solar Dispute).