WTO rules against India in solar dispute with US
February 25, 2016, 5:56 am

India has said it expects peak power demand to double over the next five years from around 140,000 megawatts today [Xinhua]

The US had challenged the rules on the origin of solar cells and solar modules used in India’s national solar power program.

WTO on Wednesday said the government’s power purchase agreements with solar firms were ‘inconsistent’ with international norms. India is yet to react officially to the ruling.

The US had alleged that the clause relating to domestic content requirement (DCR) in India’s solar power mission were discriminatory against imports and “nullified” the benefits accruing to the American solar power developers.

India had insisted that certain cells and modules be made in India which led the US to complain to the WTO in 2013.

The US trade complaint in 2013 alleged that the Jawaharlal Nehru National Solar Mission subsidies were available only if developers used equipment produced in India, violating a key global trade rule. The program is aimed at easing chronic energy shortages in India, Asia’s third-largest economy.

The WTO’s Dispute Settlement Panel has now ruled that “the DCR measures are inconsistent” with relevant provisions of TRIMs (Trade Related Investment Measures) Agreement and with the articles of the erstwhile GATT (General Agreement of Trade and Tariffs).

The panel also found that the DCR measures accorded “less favourable treatment” to the American companies and were “not justified” under the general exceptions in GATT rules.

India can challenge this ruling before the appellate body of the WTO.

“We conclude that, to the extent that the measures at issue are inconsistent… (with the relevant articles of the TRIMs Agreement and the GATT 1994), they have nullified or impaired benefits accruing to the United States under those agreements,” the WTO panel said.

“In particular, the panel found that the electricity purchased by the government is not in a “competitive relationship” with the solar cells and modules subject to discrimination under the DCR measures,” the findings said.

The United States said its solar exports to India had fallen by 90 per cent from 2011, when India imposed the rules.

India has said it expects peak power demand to double over the next five years from around 140,000 megawatts today. To help meet that demand, 100,000 MW of new capacity is to come from solar panels, and of that it wants at least 8,000 MW to come from locally-made cells.

Foreign players manufacturing in India will probably win the bulk of those orders.

TBP and Agencies