India drops solar anti-dumping plan

India has dropped plans to impose an anti-dumping duty on solar panel imports, a move that is likely to help mend frayed commercial ties with the United States before Prime Minister Narendra Modi meets President Barack Obama this month.
Days before Modi took office in May, a quasi-judicial body ordered the imposition of the duty on panels imported from the United States, China, Taiwan and Malaysia to protect domestic solar manufacturers.
The order issued had set duties of between 11 and 81 U.S. cents per watt following a investigation which started in 2011. The ruling had to be published by the Finance Ministry within a stipulated time frame to take effect.
"There was no notification. We allowed it to lapse," Nirmala Sitharaman, the trade and junior minister for finance, said, without elaborating.
India and the United States set great store by the economic potential of their ties, but their relationship has been fraught in recent years over trade policies and patents.
The move over solar panels comes two days after the Modi administration said it was trying to speed up clearances for all pending patent applications and working on an intellectual property rights (IPR) policy - seen by analysts as another step towards smooth things over with Washington.
Dropping the duty removes one sticking point ahead of Modi's meeting Obama in Washington on September 29-30, but it will upset Indian manufacturers who say rivals benefit from subsidies and sell their products at artificially low prices.
Modi is an advocate of solar energy and India aims to raise its solar power capacity to 20,000 MW by 2022 from 1,700 MW.
India imported solar products worth nearly 60 billion rupees ($984 million) last year, according to an industry estimate, whereas domestic manufacturers' sales amounted to less than 2.0 per cent of that figure.
The U.S.-India relationship hit its lowest ebb in a decade after a junior Indian diplomat, Devyani Khobragade, was arrested and strip-searched in New York in December. The U.S. ambassador to India resigned after the incident and has yet to be replaced. Nonetheless, Washington sees its relationship with India as critical, partly to counterbalance China's rising power. Obama has called it "one of the defining partnerships of the 21st century".
His administration aims to increase bilateral trade to $500 billion a year from about $100 billion currently.
However, New Delhi is furious about a threat of trade sanctions made by the U.S. Trade Representative's (USTR) office over India's protection of IPR, preference for domestic producers and non-trade barriers.
In a report this year, the USTR said India's limits on the approval of pharmaceutical patents, a convoluted process for patent challenges and its plan to open a series of patented drugs to generic manufacturers created "serious challenges" for some innovators.
Sitharaman said last week the new IPR policy would be in place within next six months to safeguard India's interests and provide clarity on existing laws. She did not give more details.
The government will also set up a think-tank to advise it on global intellectual property issues, she added.
India eyes Chinese investment
Another message adds: Indian officials voiced optimism last week that a visit by Chinese President Xi Jinping next week will open a new chapter in relations between the Asian giants, with hopes high for investment deals to narrow a yawning trade deficit.
Trade minister Nirmala Sitharaman raised expectations ahead of the Sept. 17-18 visit, saying Xi was likely to announce investments in industrial parks and help set the course for smoother cooperation between the two nations.
"We hope that during this visit the Chinese and Indian relationship of the last 50-60 years would see a directional change," Sitharaman told reporters.
She echoed comments from India's National Security Advisor Ajit Doval. Several newspapers quoted him as saying that ties with China could take an "orbital jump" under the leadership of Xi and India's Prime Minister Narendra Modi. Speaking in Beijing, Doval, a hawkish former spy chief who is close to Modi, said the two nations' disputed border would also be discussed on the trip.
Although their commercial ties have rapidly strengthened, the two nations still disagree on where their Himalayan border lies, after China beat India in a war in the region in 1962. To this day, each side claims areas of the other's territory.
Trade minister Sitharaman said the government was also in talks with Chinese companies to set up production in India.
China plans to invest some $7 billion in two industrial parks in western India, including one in Prime Minister Narendra Modi's home state of Gujarat, Indian media reported last week.
Sitharaman signed a memorandum of understanding to establish the industrial parks during a visit to China in July.
On his first day in India, Xi is expected to visit Gujarat, where Modi headed the state government until becoming prime minister in May.
Two-way trade totalled $65.9 billion last year, but $51 billion of that was exports from China. India hopes that Chinese investment in the industrial parks will offset the deficit and help India emulate its neighbour's success as a manufacturing powerhouse.
Sitharaman said she was also seeking greater market access for Indian products and services in the Chinese market. India has struggled to improve export conditions for its pharmaceuticals and IT services.
"We have discussed a range of issues with China. These also included bullet trains. Whether there will a be agreement or not during the visit, you will have to wait for that," Sitharaman told reporters.
Modi has launched a "Make in India" drive since taking office to drum up foreign investment. He came back from a trip to Japan last week with a promise of $35 billion in infrastructure investment.