Solar mission: US again challenged India's solar export restrictions in WTO

February 16, 2014

On the second phase of the Jawaharlal Nehru National Solar Mission (JNNSM), the Government of India stated that it hadn’t violated global trading norms under the World Trade Organization (WTO), even as the US filed a second case against India in WTO.

Why USA Trade Representative filed a case against India at WTO on the issue of Phase II of JNNSM?

The United States of America (USA) challenged the domestic content requirement in Phase II of India’s National Solar Mission (NSM), which requires solar power developers to use Indian-made equipment. It alleged that the requirement was discriminatory and against international norms, including World Trade Organization (WTO) laws, and affects US solar panel manufacturers.

In February 2013, the US had filed a similar case related to the first phase of the mission. Though, it didn’t pursue that case.

What is India’s perspective against the allegations made by USA on the issue of Phase II of JNNSM?

The Government of India dismissed the allegations and stated that its national solar mission programme is WTO-compliant and it would defend its stand in the Geneva-based multilateral body.

India argued that its solar policies are legal under WTO government procurement rules that permit countries to exempt projects from non-discrimination obligations.
Ministry of New and Renewable Energy (MNRE) pointed out that many US companies have won contracts in phase II of India’s National Solar Mission. Thus, there should not be such issue of discrimination against them.

Why there is a bone of contention between India and USA over the domestic content requirement in Phase II of India’s solar program?

In the Phase II of the solar mission, the Ministry of New and Renewable Energy (MNRE) has freed half the projects from local sourcing conditions.

Phase I of policy implementation: MNRE involved developers of solar photovoltaic (“PV”) projects employing crystalline silicon technology to use solar modules manufactured in India.
Phase II of policy implementation: MNRE expanded this domestic sourcing requirement to crystalline silicon solar cells and thin film technologies as well.
At present, solar thin film consists of the majority of US solar product exports to India and these domestic content requirements will probably cause even greater harm to US producers than under Phase I. That’s why, there is there is a bone of contention between USA and India.

About Jawaharlal Nehru National Solar Mission (JNNSM)

Also known as the National Solar Mission. Officially launched by Prime Minister of India, Dr. Manmohan Singh in 2010.
Objective: To establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible.
Mission: To have 20 GW of grid-connected solar power by 2022 and to make it as cheap as electricity from conventional sources.
Part of National Action Plan on Climate Change.
Adopted 3-phase approach: Phase I (2012-13), Phase II (2013–17) and Phase III (2017–22).
The first phase with a target total of 1,200MW (off-grid and on-grid) ended in March 2013. (In the first phase, the off-grid solar energy target was only 200 MW).
The second phase has a target of 9,000 MW grid-connected and 800 MW off-grid solar power by 2017.

Under WTO rules, if the matter is not resolved through consultations within 60 days of the request, the US states may ask the WTO to establish a dispute settlement panel.
Note: Under WTO dispute-settlement body norms, a complainant first seeks consultations with the target country, which typically takes 60 days. Subsequently, a panel of lawyers is constituted and the case is officially registered as a trade dispute.

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