One of the bright spots in the recent rebirth of U.S. manufacturing has been the area of solar energy.

But import restrictions imposed by one of the world’s fastest growing markets for solar power technology, India, is casting a shadow over the ability of U.S. solar panel manufacturers to compete.

According to the Wall Street Journal, a new rule scheduled to go into effect in April will ban the importation of foreign-made solar panels. This will take place at about the same time the Indian government begins spending $20 billion to help power plant developers increase their solar power capacity by 20,000 megawatts in an effort to increase electricity capacity for a growing economy while also increasing clean energy sources.

Only those foreign companies that have established local manufacturing plants in India through joint ventures will get a piece of the action, the Journal reports.

U.S. officials, meanwhile, are proposing that rather than an outright ban, India should consider tax incentives or subsidies to encourage U.S. and other foreign companies to set up Indian-based solar panel production facilities – an argument that President Obama also made during his state visit in November.

According to the Journal, it’s not just solar companies that are running into walls in India. Retailers such as WalMart are still not allowed to set up stores because of a ban on foreign direct investment in that sector. Tech companies including Google are seeing heightened scrutiny from India’s regulators in regard to content and services. And foreign pharmaceutical companies are facing potential new restrictions in their ability to buy Indian firms.

Despite the restrictions, U.S. exports to India have quadrupled, to more than $16.4 billion, from 2002 to 2009, but U.S. officials see room for much more improvement.

In recent days, U.S. Secretary of Commerce Gary Locke visited India to declare support for an improved trade relationship, especially in areas such as civil nuclear energy, civil aviation, defense and homeland security.
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Thomas Derr

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