Academic journal article The Journal of Developing Areas

Green Growth & Trade Restrictions: Assessing Socio Economic Impacts of Local Content Requirements in Indian Solar Policy

Academic journal article The Journal of Developing Areas

Green Growth & Trade Restrictions: Assessing Socio Economic Impacts of Local Content Requirements in Indian Solar Policy

Article excerpt

(ProQuest: ... denotes formulae omitted.)


Public policies for renewable promotion have been endorsed with multiple performance expectations ranging from climate change mitigation to security of energy supply, creation of domestic industry & local employment, expansion of domestic export and climate change adaptation strategy (Lemon et al, 2015, Joshi & Sharma, 2014; Allan et al , 2011; Rio and Burguillo, 2009; Reddy et al 2007). The socio economic expectations implicit in renewable scale up often warrant use of unique, normatively tailored policy design that fits well with economy specific developmental agenda. A highly criticized but popular strategy amongst policy makers have been to instrument channelization of intermediate goods for renewable energy deployment through local producer or manufacturer by including Domestic or local content requirements (DCR/LCRs) .

DCRs are often promoted on the premise of stated need for effective niche protection of nascent RET sector in both developing and developed economies. For instance, Brazil, Spain, China and Canada have effectively used DCRs for rendering protection to their growing wind sector while others like Denmark and Germany have opted for soft loan incentives to projects having greater local content element (Kuntse & Moerhout, 2013, Bradsher, 2010). Paradoxically even after being readily endorsed globally, status of DCR as a policy instrument has been controversial & often criticized for its performance ambiguities. For instance, Shrimali & Sahoo (2014) point at performance inconsistencies even within the limited context of renewable energy industry while Pack and Saggi (2006) find use of DCRs in industrial policies limiting for the purpose of building competitive domestic market. Taking the clue this study takes the case of DCRs associated with targeted solar PV deployments under Indian National Solar Mission (NSM). Existing literature on the issue (Shrimali and Sahoo, 2014 and Sahoo & Shrimali 2013) point at deficiencies in Indian solar innovation system prescribing removal of DCR requirements in order to make Indian solar sector globally competitive and also to leverage trade benefits associated with open markets in sector. However, regional socioeconomic benefits rendered by Indian solar DCRs have not been assessed.

This work differentiates itself by mapping socio economic impacts of DCR as a policy instrument in Indian solar policy using input output analysis. The initial draft of National Solar Mission, NSM (MNRE, 2009) included a well-articulated a dynamic DCR element for solar capacities deployed covering all the three phases of mission road map. NSM phase I (2010-2013) stipulated stringent domestic content requirement (D CR) criteria prohibiting installers from using imported Crystalline-Silicon (C-Si) solar panels for NSM projects (MNRE, 2009). However, policy structure for NSM phase II (commenced, January 2014) was readjusted to capture emerging price dynamics of solar PV generation with deployment bids for 750 MW solar capacity providing equal allocation (375 MW each) for both DCR and open category projects. We construct an input-output based simulation model for estimating socio economic impacts associated with deployment of a unit MW of grid connected ground mounted solar PV capacity in India. The estimation compares impacts associated with deployment of DCR projects and open category solar plants where primarily imported solar panels are used. The following section details Indian solar policy and relevant studies dealing with socio economic impacts of global RET deployments. Section three provides methodological overview and data sources for the study. Section four details analysis, results and inferences followed by conclusion in section five.


National solar mission (MNRE, 2009) encompasses comprehensive policy framework for implementing ambitiously laid Indian solar policy targets in India (Yanetti, 2015). …

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