WTO rules against India in solar case with US

In a setback to India, the World Trade Organization (WTO)’s appellate body upheld the rulings of a panel which stated the Indian government’s power purchase agreements with solar firms were “inconsistent” with international norms.

“The appellate body (of the WTO) upheld each of these panel conclusions appealed by India,” the WTO stated.

The US had, in 2014, filed the complaint before the global trade body alleging discrimination against American firms.

The US Trade Representative (USTR) Michael Froman said the WTO appellate body had issued a report in favour of the Obama administration’s challenge to India’s “domestic content requirements (DCR)” under its National Solar Mission (NSM). Since India enacted these requirements in 2011, which requires solar power developers to use Indian-manufactured cells and modules, American solar exports to India have fallen by more than 90 per cent, he said.

“This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change,” Froman added.

The Obama administration, he said, strongly supports rapid deployment of solar energy worldwide, including in India. “Local content requirements are not only contrary to WTO rules, but actually undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, making it more difficult for clean energy sources to be cost-competitive,” he alleged.

US-based National Association of Manufacturers (NAM) welcomed WTO’s rejection of India’s appeal and urged the Indian government to move quickly to dismantle its discriminatory DCR that have blocked access for US solar cell modules.

“As each and every previous ruling in this case has shown, India’s DCR are a clear violation of core WTO rules and today (Friday)’s victory will give an important boost to US manufacturing,” NAM said. “This decision also demonstrates why the strong rules-based WTO system and trade agreements with binding and strong enforcement rules are critical to open markets and eliminate unfair barriers overseas.”

THE SETTING SUN

• WTO’s appellate body upheld the rulings which stated the Indian government’s power purchase agreements with solar firms were “inconsistent” with international norms
• The US had filed the complaint before the global trade body, in 2014, alleging discrimination against American firms
• In February 2016, the WTO panel found in favour of the US in a dispute challenging India’s “localisation” rules discriminating
• The case assumes significance as India recently dragged the US to the WTO over America’s DCR and subsidies provided by eight states in the renewable energy sector

Earlier in February this year, USTR said the WTO panel found India’s “localisation” rules discriminating against imported solar cells and modules under India’s NSM.

“The WTO appellate body rejected all of India’s defensive arguments,” USTR said. In particular, it upheld the panel’s finding that India’s DCR measures are not justified under the government procurement derogation of Article III:8(a) of the General Agreement on Tariffs and Trade 1994, because the Indian government does not itself procure solar cells or modules under the NSM, USTR said.

The case assumes significance as India recently dragged the US to the WTO over America’s DCR and subsidies provided by eight states in the renewable energy sector.