The World Trade Organization (WTO) Dispute Settlement Panel has
ruled against India in its solar energy dispute with USA, requiring
the Government of India to offer a level playing field to both
foreign and domestic manufacturers of solar panels and solar
modules. Under the Jawaharlal Nehru National Solar Mission (JNNSM),
the Government of India launches projects that require the
procurement of solar modules and solar cells from domestic
producers for allocated capacity generation under the JNNSM. This
mandatory requirement of sourcing equipment from India is termed as
Domestic Content Requirement (DCR).
However, the DCR has been struck down by the WTO Dispute
Settlement Panel as being in violation of the WTO agreements to
which the two nations are signatories. India plans to appeal
against this decision, or look for a bilateral arrangement with USA
to resolve the issue. According to the WTO rules, the decision will
be reviewed and finalized by WTO Dispute Settlement Panel and
delivered to the two signatory countries.
A point that came up in the challenge by the United States of
America at the WTO Dispute Settlement Panel was that solar power
developers in India are provided with certain benefits such as
long-term tariffs on electricity contingent on the use of solar
panels and solar modules that are manufactured in India. Further,
the DCR has been expanded under Phase II of the JNNSM to cover thin
film technology, which makes up for the bulk of the solar exports
of United States of America to India. The challenge at the WTO
Dispute Settlement Panel was the alleged violation of the principle
of national treatment under the WTO rules, both under the General
Agreement on Tariffs and Trade and the Agreement on Trade –
Related Investment Measures. The two signatory nations are to hold
detailed consultations and negotiations under the WTO dispute
settlement mechanism in order to a reach an amicable settlement to
the trade-related standoff.
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