"Today, the WTO panel agreed with the US that India's localisation measures discriminate against US manufacturers and are against WTO rules," US Trade Representative Michael Froman said.
"This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory localisation policies," Froman said in a statement.
The panel has agreed with the US that India's domestic content requirements discriminate against US solar cells and modules by requiring solar power developers to use Indian-manufactured cells and modules rather than American or other imported solar technology in breach of international trade rules, he said.
"As we made clear when we launched this dispute, the Obama Administration is committed to strengthening the clean energy sector and the millions of jobs it supports here in America and all over the world," the USTR said.
The US strongly supports the rapid deployment of solar energy around the world - including in India.
"But discriminatory policies in the clean energy space in fact undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, raising the cost of generating clean energy and making it more difficult for clean energy sources to be competitive," it said.
Under these requirements, solar power generators are required to use Indian-manufactured solar cells and modules to participate in certain projects under the program.
"This means that US companies have been effectively blocked from competing for an important share of India's solar power equipment market. Since India enacted these domestic content requirements in 2011, US solar exports to India have fallen by over 90 per cent," it added.