The United States on Friday claimed victory over India at the World Trade Organisation (WTO) wherein it had challenged the local content requirement in solar panels by New Delhi.
The setback comes a couple of days after India dragged the US to the WTO challenging the domestic content requirements and subsidies provided by eight US states in the renewable energy sector.
The WTO's appeals judges upheld an earlier ruling that found India had broken WTO rules by requiring solar power developers to use Indian-made cells and modules.
The appeal ruling is final and India will be expected to bring its laws into compliance with the WTO rules.
US Trade Representative (USTR) Michael Froman said that the WTO Appellate Body has issued a report finding in favour of the Obama Administration’s challenge to India’s ‘domestic content requirements’ under its National Solar Mission.
“Since India enacted these requirements in 2011, which requires solar power developers to use Indian-manufactured cells and modules, American solar exports to India have fallen by more than 90 per cent,” he said.
The Appellate Body affirmed an earlier WTO panel report agreeing with the US that India’s domestic content “requirements discriminated against” American-made and other imported solar products, in breach of international trade rules.
“This report is a clear victory for American solar manufacturers and workers, and another step forward in the fight against climate change,” Froman said.
The Obama administration, he said, strongly support 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 alleged.
The National Association of Manufacturers (NAM) in a statement welcomed WTO’s rejection of India’s appeal and urged the Indian government to move quickly to dismantle its discriminatory domestic content requirements that have blocked access for US solar cell modules.
“As each and every previous ruling in this case has shown, India’s domestic content requirements are a clear violation of core WTO rules and today’s victory will give an important boost to US manufacturing,” NAM said.
“This decision also demonstrates why the strong rules- based WTO system and trade agreements with binding and strong enforcement rules are critical to open markets and eliminate unfair barriers overseas,” it said.
Earlier in February this year, USTR said the WTO panel found in favour of the US in a dispute challenging India’s “localisation” rules discriminating against imported solar cells and modules under India’s National Solar Mission.