US Challenges India’s Solar Export Restrictions

The US on Tuesday, 11 February challenged the domestic content requirement of India’s solar mission, which it alleged is discriminatory and against international norms, including WTO laws, and badly affects the American domestic solar panel manufacturing industry.

As the US trade representative, Mike Froman, announced his decision, officials argued that they have been forced to take a measure so as to protect some American 10,000 jobs in its solar industry and to have a significant pie in the second largest solar market of the world.

Froman said the US has requested WTO dispute consultations with India concerning domestic content requirements in phase II of India’s Solar Mission.

These domestic content requirements discriminate against US solar cells and modules by requiring solar power developers participating in phase II to use Indian-manufactured solar cells and modules instead of US or other imported equipment, Froman said.

“These domestic content requirements discriminate against US exports by requiring solar power developers to use Indian-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,” Froman alleged.

“We also take this action in support of the rapid global deployment of renewable energy. 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,” Froman told reporters at a news conference.

He said in October 2013, India’s cabinet approved measures governing the implementation of phase II of its National Solar Mission (NSM). For solar projects under phase II, India is again imposing domestic content requirements, under which solar power developers must use Indian-manufactured solar cells and modules instead of US or other imported equipment.

Moreover, the phase II domestic content requirements have been expanded to cover thin film technology, which was exempt from such requirements under phase I. As thin film currently comprises the majority of US solar product exports to India, these domestic content requirements are likely to cause even greater harm to US producers than under phase I, the top US official said.

A request for consultations is the first step in the WTO dispute settlement process, and consultations are intended to help parties find a solution at this stage. Under WTO rules, 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.

Froman said before going public, the US has informed the Indian government officials in Delhi, Geneva and Washington. There was no initial response from India.