Government issues penalty for violating DCR under MNRE solar projects

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The government of India, through its MNRE, has issued a memorandum, dated February 20, titled “Penalties for violation of norms of Domestic Content Requirement (DCR) under solar PV power projects under MNRE’s Schemes/Programs.” The announcement was published today, February 22, by the MNRE.

Market insiders speculate that the decision was taken after imported solar cells and/or modules being passed off as domestically-manufactured products, were reportedly found in DCR projects.

To put a halt to this practice, the MNRE has decided, with the approval of R K Singh, Ministry of Power and MNRE head, that the following actions shall be taken by either the MNRE or any agency acting on behalf of the MNRE:

  1. The filing of criminal case under Indian Penal Code (IPC) 420 (Cheating & Dishonesty) & related sections;
  2. Blacklisting of the developer for 10 years;
  3. Forfeiting of relevant bank guarantee(s); and
  4. Disciplinary case against the officers of the concerned CPSU/State Government.

To encourage domestic manufacturing of solar PV cells and modules, the Indian Government introduced a DCR policy in 2010. The WTO has strict DCR guidelines, however, and projects must comply with these, or risk being scrapped, as happened yesterday, when the Indian Government announced it would remove remove DCR from its Batch-IV, Phase-II Scheme.

This decision came on the back of months of controversial toing and froing between the U.S., which accused India of flouting the DCR rules, and the WTO, which subsequently investigated the accusations.