US to take India to WTO over localisation policy in solar power projects

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SummaryTHE United States Trade Representative (USTR) late on Monday said it would take India to the World Trade Organisation’s ...

THE United States Trade Representative (USTR) late on Monday said it would take India to the World Trade Organisation’s (WTO) dispute resolution mechanism over the localisation thrust in India’s solar power policies, saying it could put American equipment makers at an unfair disadvantage. The USTR is the American counterpart to India’s commerce minister.

Policymakers here have termed the USTR move to seek dispute resolution for the alleged discrimination against US companies in India’s 750 MW Solar Mission second-phase as yet another display of Washington’s growing disenchantment with India’s “fully WTO-compliant” trade and investment policies.

Bidding for the Phase II of the mission was launched last year, with as many as 68 Indian and foreign companies competing for 122 projects. Many projects went to US companies.

While commerce minister Anand Sharma said New Delhi will respond to the US move “adequately at the WTO”, commerce secretary Rajeev Kher hinted at retaliatory moves.

He said: “We have clear evidence of 13-odd US states which follow restrictive policies.” Kher said India was also investigating possible dumping of solar equipment by companies from the US, China and some other countries.

New Delhi also hinted that India’s response could include filing a counter-application seeking justification from the US on sops given to American firms utilising products sourced locally and employing local workers in renewable energy and water projects.

Sharma also said the Solar Mission involves heavy subsidies and public money should not be used to pay for imports. “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,” the minister said.

The solar row comes close on the heels of the arrest of Indian diplomat Devyani Khobragade in a visa fraud case and India’s retaliatory measures including action against US diplomats and accusing American embassy teachers of visa fraud.

“These domestic content requirements (under India’s Solar Mission phase II) discriminate against US exports by requiring solar power developers to use India-manufactured equipment instead of US equipment. These unfair requirements are against WTO rules, and we are standing up today for the rights of American workers and businesses,” said USTR Michael Froman. He added: “These types of ‘localisation’ measures not only are an unfair barrier to US exports, but also raise the cost of solar energy, hindering deployment of solar energy around the world, including in India.”

In the WTO dispute settlement

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