United States drags India to WTO over solar energy projects

Written by Press Trust of India | Washington | Updated: Feb 12 2014, 05:06am hrs
Solar energyThe US has challenged the domestic content requirement of India's solar mission. Reuters
The US has dragged India to WTO on the issue of the country mandating use of only local equipment for solar projects, a charge rejected by New Delhi saying several American states practise protectionist policy for renewable energy projects.

The US has challenged the domestic content requirement of India's solar mission, which requires solar power developers to use Indian-made equipment.

It notified the WTO Secretariat of a request for consultations with India concerning certain measures relating to domestic content requirements for solar cells and solar modules, according to the multilateral trade body.

The measures correspond to Phase II of the Jawaharlal Nehru National Solar Mission programme.

"The United States adds that solar power developers receive certain benefits and advantages, such as long-term tariffs for electricity, contingent on their purchase and use of solar cells and solar modules of domestic origin.

"The claim states that India provides less favourable treatment to imported solar cells and solar modules that that accorded to like products originated in India and they are trade-related investment measures inconsistent with India's obligations under the GATT," according to the WTO.

Meanwhile, India is probing alleged dumping of solar panels by China and the US.

"DGAD is looking into one of the request...that involves supply of solar panels from China, the US and few others," Commerce Secretary Rajeev Kher said in New Delhi.

US Trade Representative Michael told reporters yesterday that domestic content requirements of India's solar mission discriminated against US exports by requiring solar power developers to use India-manufactured equipment.

"These unfair requirements are against WTO rules, and we are standing up today for the rights of American workers and businesses," he said.

Dismissing the US allegations, India said its national solar mission programme is WTO-compliant and it would defend its stand in the Geneva-based multilateral body.

"India will respond adequately at the WTO...We are also very clear that India has to create domestic manufacturing capacities. India must have those capacities. Otherwise, we will end up importing for the rest of our lives," Commerce and Industry Minister Anand Sharma said.

He said the programme involves huge subsidy and public money should not be used to pay for imports.

Kher said US solar and renewable energy projects are protectionist in nature too.

"We have clear evidence of, I think, 13-odd states which follow equally restrictive policies...So we are examining their policies," he said.

Froman said before going public, the US had informed the Indian government officials in New Delhi, Geneva and Washington.

Last February, the US had challenged India's solar programme and formally requested consultations over the first stage of the mission. The programme aimed at doubling India's renewable energy capacity by 2017.

A request for consultations is the first step in the WTO dispute settlement process and is intended to help parties find a solution. If the matter is not resolved through consultations within 60 days of the request, the US may ask the WTO to establish a dispute settlement panel.