India loses solar appeal at World Trade Organization

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The World Trade Organization (WTO) ruled on Friday against India’’s appeal to overturn a U.S. complaint regarding what it claims are discriminatory domestic content requirements (DCR) in India’’s solar sector.

The National Solar Mission (NSM) provision stipulates that 10% of the modules used in Indian solar plants should be produced locally.

The U.S. originally lodged a complaint with the WTO against India’s DCR in 2014, prompting the subsequent appeal and tit-for-tat filing of complaints from India regarding eight of the U.S.’s renewable energy programs.

Last week, however, the WTO appellate body upheld its original ruling that found India had broken WTO rules by requiring developers of solar power projects in India to use locally made cells and modules.

The case reached a head in February, when India lodged the appeal, claiming exemptions from WTO trade rules on the basis that its NSM and solar sector was included in government procurement, and that its domestic solar goods were in short supply.

These arguments were rejected. The WTO rules are clear: countries are not allowed to favor local producers of components while discriminating against imports. In seeking to boost India’s domestic manufacturing industry, the government’s NSM outlined certain local content requirements across the country, and thus was in violation of these regulations.

The unedifying spat between the U.S. has resulted in a 90% fall in U.S. solar exports to India, prompting the WTO’s decision to be welcomed by U.S. trader representative Michael Froman. “This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change,” he said in a statement.

“We strongly support the rapid deployment of solar energy worldwide, including in India. But 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,” Froman added.

The Solar Energy Corporation of India (SECI) could not be reached by pv magazine for a response on the matter.

A statement by the U.S. Solar Energy Industries Association (SEIA) also applauded the decisions, calling it an “important victory for the U.S. solar industry and America’s hard-working 209,000-plus solar employees”.

“[India’s] National Solar Mission local content requirements unfairly discriminated against U.S. manufacturers and the decision will help even out the playing field,” said the SEIA statement.

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