The India-U.S. solar collaboration has hit some snags as the U.S. is trying to push India to remove regulations related to imports of solar technology, the Wall Street Journal reported.
India and U.S. launched a space-based solar energy initiative in November, just ahead of President Obama's tour of India.
India, one the world's largest user of coal, is trying to switch to alternative sources of 'clean' energy, focusing on solar energy currently. The solar program plans to subsidize the generation of 20,000 megawatts of power by 2022.
India has selected 30 companies to receive these subsidies for generation of solar power but those firms are banned from importing certain types of solar panels over the next several months, and will face a complete import ban starting in April, WSJ reported.
Many of the companies involved in the production of solar panels like Suntech Power Holdings Co Ltd, Canadian Solar and LDK Solar, are based in Europe and China, but U.S. has one of the major producers of photovoltaic panels, First Solar Inc.
Senior U.S. government officials have raised concerns about the trade restrictions with their Indian counterparts and have urged India to reconsider them, the paper reported, citing people familiar with the matter.
India currently has only a couple of firms involved with solar technology - Moser Baer India Ltd and Tata BP Solar India Ltd. But the standing of these companies globally is far lower than most other firms like First Solar.
Experts are questioning how much will India's renewable energy plans be hampered due to these government restrictions. Like China, India has not agreed to a cap on carbon emissions but will invest in cleaner energy.
Many efforts are underway to promote solar and wind energy, particularly in rural areas.
The potential market for clean energy in India is about $2.11 billion per year, including $2.04 billion for decentralized renewable energy services and $70.1 million for energy products like solar home systems and solar lanterns, according to a study conducted by IFMR Research Centre for Development Finance.
Sindoor Mittal, who is running solar projects for Welspun Energy Ltd, an Indian firm that is planning to build plants with 500 megawatts of capacity in coming years and is one of the recipients of government subsidies, says some advanced technologies like the thin-film solar cells are not available in India, WSJ said.
India is nowhere in the list of global manufacturing leaders in solar technology, she says.
First Solar is the largest producer of thin-film solar cells, which are more flexible and cheaper than other cells.
India's reluctance to allow imports into India is already distorting the market for solar panel, WSJ said.
Local dealers are already increasing prices, the paper said, quoting Inderpreet Wadhwa, founder of Azure Power, another recipient of government subsidies.
However, India defends itself stating that the U.S. is showing double standards, the paper said. American firms did not lash out at China with the same intensity they are criticizing India currently and many U.S. firms have set up local manufacturing facilities in China, Rahul Khullar, secretary of India's Ministry of Commerce and Industry, said.