Last week, the U.S. began the World Trade Organization (WTO) dispute settlement process against India’s local content provision of its national solar program.
India’s national solar program, called the Jawaharlal Nehru National Solar Mission, aims to install 20 GW of PV capacity by 2022. That’s a 20-fold increase in a decade, since the country only reached 1 GW of capacity in 2012.
The National Solar Mission is part of the government’s efforts to fill a 9 percent gap in electricity supply that costs the country about one percent in economic growth annually.
While the U.S. supports increased installations of renewable energy globally, the U.S. government argues that the local content provisions of India’s Solar Mission – which require that a minimum portion of the solar cells and modules originate in India – goes against the World Trade Organization’s rules, and unfairly discriminates against U.S. PV cell and panel manufacturers.
“Let me be clear: the United States strongly supports the rapid deployment of solar energy around the world, including with India,” said U.S. Trade Representative Ron Kirk.
“Unfortunately, India’s discriminatory policies in its national solar program detract from that successful cooperation, raise the cost of clean energy, and undermine progress toward our shared objective,” continued Kirk.
Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), supported the move.
“The use of discriminatory localization barriers to bolster domestic interests is a growing trend within the global solar industry which must be reversed,” said Resch.
“We are hopeful that today’s action by the U.S. government will encourage not only India but other countries contemplating the imposition of localization barriers to focus instead on WTO-consistent government support measures.”
India, on the other hand, argues that the requirements of the National Solar Mission fit into a class of WTO rules that allows some projects to be exempt from non-discrimination rules.
Tarun Kapoor, joint secretary at the Ministry of New & Renewable Energy, told The Wall Street Journal that the Indian local content provision applied only to “a few projects totaling 350 megawatts.”
He further argued that India should be able to shield its PV manufacturers from competition from overseas manufacturers whose imports are unfairly priced.
India and the U.S. will now go through a 60 day “consultation” period; if the two countries cannot come to a resolution by then, the U.S. can then seek a formal panel review of the case.