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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