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India may amend solar program after WTO ruling

India may amend solar program after WTO ruling

By BizLED Bureau

Sep 20, 2016: India has lost its appeal at the World Trade Organisation in a solar power dispute against the US. India failed to overturn a US complaint that India had discriminated against importers in the Indian solar power sector.

In a way, it seems that India’s National Solar Mission (NSM), an ambitious solar plan that aims to meet the ever rising power demand of India, has suffered a setback, thanks to the US who managed to block the scheme through WTO

WTO rules broken

A WTO appeal found that India had broken WTO rules by making it mandatory for solar power developers to use India-made modules and cells.This means that the appeal ruling is final and India will now have to bring its laws into compliance with the WTO rules. Michael Froman, a US trade representative, said in a statement that the report reflects a clear win for the US solar manufacturers and workers.

India may amend solar program after WTO ruling

Since India brought in the rules, the US solar exports to India have dropped by over 90%, the statement said. India cannot claim exemptions on the basis of that its national solar power sector was included in government procurementnor on the basis that there was lack of solar goods supply, according to a previous ruling of February 2016.

The US had first launched a solar power dispute in February 2013, with an increasingly common complaint relating to local content requirements. The appeal ruling came just days after India launched a WTO complaint against subsidies for the solar industry in eight US states.

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According to WTO rules, nations are not permitted to discriminate against imports, and support local producers. However, over the past five years, nations eager to support their own manufacturers have often resorted to local content requirements, while keeping an eye out for their use by others.

Impact of the failed appeal

Due to this failed appeal at WTO, India would now be forced to amend the NSM. The WTO ruling against India is not in sync with climate change goals. Some states in USA also have the same domestic content requirement rules for renewable energy  generation schemes. Industry experts believe that USA should drop the case and not pursue it further as it would undermine green energy generation not only in India but also in the US.

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