Ambassador Jonathan FRIED, Mission of Canada to the WTO

9 February 2017 | Geneva, Switzerland

Session 1: Drivers and barriers for integration of global value chains in the Clean Energy industry

JONATHAN FRIED

Sourabh SEN, CEO, Sentral Energy

9 February 2017 | Geneva, Switzerland

Session 1: Drivers and barriers for integration of global value chains in the Clean Energy industry

SOURABH SEN

Raghunath MAHAPATRA, Sr. Vice President Strategy, Welspun Energy

9 February 2017 | Geneva, Switzerland

Session 1: Drivers and barriers for integration of global value chains in

the Clean Energy industry

RAGHUNATH MAHAPATRA

• Clean energy sources – Solar PV and Wind

• Current capacity – 50 GW (predominantly wind, but solar PV is the current focus)

• Target: 100 GW solar PV by 2022 10-15GW per annum

• BOQ comprises, at high level, modules (panels), Inverters, Balance of System (BOS)

• International trade focus:

– Modules (50-60% of project cost)

– Steel and DC cables (sporadic)

• Photovoltaic cell and module manufacturing capacity in India*

– Cell: Manufacturers – 16, installed capacity – 1.468 GW, Operational 1.12GW

– Modules: Manufacturers – 94, installed capacity – 5.85GW, Operational – 4.30 GW• Min = 3MW, Max = 500MW, No of manufacturers with >100 MW = 12, Capacity with > 100MW = 2.89GW

• Average project sizes increasing (50MW) vs. Median manufacturing size (32MW)

Clean energy value chain in India and global linkage

*Source: Ministry of New and Renewable Energy (MNRE)

• Domestic content requirement

– 2013 – 14: Anti dumping duty investigation

– 2016: WTO Dispute Settlement Panel Report

– Procurement with DCR (LCR) continues (~10% of capacity, but infrequent – not policy driven)

– Domestic modules are quoted in USD since wafers and cells need to be imported

– Domestic modules are ~10-15% costlier than imported

– Make in India program – encouraging domestic manufacturing of modules – import of wafer and cells are likely to continue

• Module imports continue to be tax-free but

– Discretionary interpretations of definition and classifications (HS codes) leading to project delays

• Goods and Services Tax (GST) introduction

– Uniform taxation is likely to remove tax benefits.

– Estimates show capex to increase by 6-10%

– Deliberations are continuing

Trade issues in solar PV modules

• Government to focus on Make in India program

– Local job creation

– Balance of payment

– Security concerns especially for electronic and automation component using communication

– International trend justification for protectionism

• International Solar Alliance to increase trade

• Focus on affordable electricity ( tariff) capex import to continue mainly due to higher domestic cost

• Recommendation to incentivize domestic manufacturing through international collaboration to bring cost parity.

– Trade barrier through DCR requirement will not be needed

• Quota (DCR) vs. Duty based debate to continue as long as there is pressure

• Trade negotiation tactic – India looking for enhanced mobility (product vs. People)

The way forward

Thank you

Kuno ZURKINDEN, Advisor, Switzerland’s State Secretariat for Economic Affairs (SECO)

9 February 2017 | Geneva, Switzerland

Session 1: Drivers and barriers for integration of global value chains in the Clean Energy industry

KUNO ZURKINDEN

Ingrid JEGOU, Director, Climate, Energy and Natural Resources, ICTSD

9 February 2017 | Geneva, Switzerland

Session 1: Drivers and barriers for integration of global value chains in the Clean Energy industry

INGRID JEGOU