Domestic
content requirement of India’s solar mission on 10 February 2014
was challenged
by the United States, which it alleged as discriminatory and against
international norms including the laws of WTO. It has badly affected the
American domestic solar
panel manufacturing industry. The decision was taken by US as a measure to
protect 10000 American jobs in solar industry and to have a significant pie in
the second largest solar market of the world. Domestic content requirements of
India’s solar mission in Phase II discriminates against US solar cells and
modules by requiring to use India-manufactured solar cells and modules instead
of US or other imported equipment.
At
present the WTO dispute consultations with India has been requested by US in
relation of concerning domestic content requirements in Phase II of India’s
Solar Mission. Union Cabinet in October 2013 approved the measures governing
the implementation of Phase II of its National Solar Mission. Under the Phase
II of the Solar Mission implementation, India has imposed domestic content
requirements under which solar power developers should use Indian-manufactured
solar cells and modules instead of US or other imported equipment.
Background
India
launched its National Solar Policy on 11 January 2010 named as Jawaharlal
Nehru National Solar Mission (JNNSM). The Phase I of the national policy
was composed of two parts
•
Batch 1 of policy implementation: India required developers of solar
photovoltaic (“PV”) projects employing crystalline silicon technology to use
solar modules manufactured in India.
•
Batch 2: India expanded this domestic sourcing requirement to crystalline
silicon solar cells as well.
In
the phase II of the solar draft policy, India has considered expansion of the
scope of the domestic content requirements further to include solar thin film
technologies and at present the majority is comprised of US solar exports to
India.
Elements
of India’s national solar policy appear to be inconsistent with India’s
obligations under the WTO agreements.
These
obligations include
•
Article III of the General Agreement on Tariffs and Trade 1994 (GATT 1994),
which generally prohibits measures that discriminate in favor of domestically
produced goods versus imports
•
Article 2 of the WTO Agreement on Trade-Related Investment Measures, which
prohibits trade-related investment measures that are inconsistent with GATT
Article III
•
Article 3 of the WTO Agreement on Subsidies and Countervailing Measures (SCM
Agreement), which prohibits conditioning a subsidy on the use of domestic over
imported goods
•
Article 5 of the SCM Agreement, which prohibits causing adverse effects on
other WTO Members through subsidies that discriminate against imported goods