India: Solar Power In India: Solar Panels, Domestic Content Requirement And The WTO


The National Solar Mission or the Jawaharlal Nehru National Solar Mission (the "JNNSM") adopted by India in 2010 targets generation of 100,000 MW of grid connected solar power capacity by 2022.

It's an ambitious target in view of India's current generation capacity of approximately 5,000 MW,1 but the intent of the Central Government is reflected in various policies and subsidy schemes floated to encourage growth of the solar industry.

The JNNSM aims to "establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible"2.

In furtherance of that aim, we have recently seen favorable state level policies, a feed-in-tariff regime, viability gap funding mechanisms, capital subsidies, progressive net-metering arrangements and solar specific renewable purchase obligations that have created a supportive environment to develop solar power in the country.


The Ministry of New and Renewable Energy (the "MNRE") has selected NTPC Vidyut Vyapar Nigam Limited ("NVVN") and the Solar Energy Corporation of India (the "SECI") as the agencies responsible for implementing the solar power project selection process.

The procedure adopted typically involves the government entering into long-term power purchase agreements ("PPAs") with solar power developers ("SPDs") wherein the government undertakes to purchase solar power generated by a particular SPD.

Generally, each PPA provides a guaranteed rate for a 25-year term at which the electricity generated by the SPD is bought by the government. The guaranteed rates are fixed by the Central Electricity Regulatory Commission at the national level, and the State Electricity Regulatory Commission at each state level.

The JNNSM is being implemented in several successive phases, with each phase initiated thus far being further divided into batches.

A mandatory domestic content requirement (known as a "DCR") was imposed on SPDs participating in phase I (batches 1 and 2) and phase II (batch 1) under the Guidelines for Selection of New Grid Connected Solar Power Projects3 and the model PPAs.

The applicable DCR is reaffirmed through a specific plan that the SPDs have to submit to NVVN or the SECI (as applicable) after entering into the PPA, specifying how they are going to meet the requirements of the applicable DCR.

As a corollary, the SPD has to be in compliance with the applicable DCR in order to avail the guaranteed rates fixed by the government under the relevant PPA.

The following table4 summarizes the DCR requirements at play since 2010:

Phase & Batch Agency Project selection period Foreign c-Si modules permitted Foreign c-Si cells permitted Foreign Thin-film modules or concentrator PV cells permitted Total # PPAs Using foreign cells and/or modules Using Indian cells and/or modules
Phase I (Batch 1) MNRE & NVVN 2010- 2011 No Yes Yes 28 14 PPAs (70MW) 14 PPAs (70MW)
Phase I (Batch 2) MNRE & NVVN 2011- 2012 No Yes 27 19 PPAs (260MW) 8 PPAs (70MW)
Phase II (Batch 1-A) MNRE & SECI5 2013- 2014 No 22 0 22 PPAs (375MW)

As is evident from the table above, the DCR has consistently increased across all phases since 2010. The rationale behind the DCR regime was based on the core principle of increasing economic opportunities, green technology and jobs in India while taking critically important steps in the global fight against climate change. However, international trade obligations have had some impact on the realization of this object.


3.1. The United States of America

In 2013, the United States brought a claim before the WTO challenging India's DCRs on the ground that they violated Article III, para 4 of the GATT 19946 and Article 2.1 of the TRIMs Agreement.

It was argued that the DCR measures modify the conditions of competition in favor of solar cells and modules of Indian origin and in fact accord less favourable treatment towards imported solar cells and modules.

Elaborating further, it was argued that India's DCR measures were inconsistent with Article 2.1 of the TRIMs Agreement because they are trade-related investment measures that make the purchase of domestic products a requirement to obtain an advantage, thus falling under paragraph 1(a) of the Illustrative List in the Annex to the TRIMs Agreement.

3.2. India

The substance of India's defense was premised on two main arguments:

  1. Article XX (j)7

    DCR measures are justified on the ground that India's lack of domestic manufacturing capacity in solar cells and modules, and/or the risk of a disruption in imports, makes these "products in general or local short supply" within the meaning of that provision; and
  2. Article XX (d)8

    DCR measures are also justified under the general exceptions, on the ground that they secure India's compliance with "laws or regulations" requiring it to take steps to promote sustainable development.


At the outset the panel found that the DCR measures were trade-related investment measures covered by paragraph 1(a) of the Illustrative List in the Annex to the TRIMs Agreement.

This sufficiently establishes that the DCRs are inconsistent with both Article III, para 4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.

The panel observed that the terms "products in general or local short supply" refer to a situation wherein the available supply of a product, from all sources, does not meet demand in a relevant geographical area or market.

In light of this, the terms "products in general or local short supply" do not cover products at risk of becoming in short supply.

The panel determined that India had not demonstrated the existence of any imminent risk of a short supply and ruled that the DCRs were not justified under Article XX (j).

Addressing the defense of Article XX (d), the panel concluded that international agreements may constitute "laws or regulations" within the meaning of Article XX(d) only insofar as they are rules that have a direct effect in, or otherwise form part of, the domestic legal system of the member concerned.

Most of the instruments identified by India did not constitute "laws or regulations" within the meaning of Article XX(d), or were not international laws or regulations in respect of which the DCR measures secured compliance.

Therefore, the panel found that India failed to demonstrate that the DCRs were justified under Article XX (d).


The decision is bound to cause ripples in the international relations between the two countries. The Indian Power Minister has alleged similar practices by the US government, citing 16 cases where support has been given to domestic manufacturers in the US.

The Indian Power Ministry's response essentially alleges targeted prosecution against the developing world and the Minister was of the view that the US government should have been more magnanimous in its approach to the issue.

The MNRE's response to the ruling appears to maintain that the future course of action will involve protecting the domestic industry. While a notice of appeal has been filed with the appellate body at the WTO, the present government seems confident that the ruling will not affect the roll out of India's ambitious solar power capacity installation.

However, there are also some very important realities in play here. It is estimated that India needs investment of over US $ 100 billion9 to achieve its green energy targets of 100 GW of solar power and 60,000 MW of wind power by 2022. What should then be the focus of governmental initiative and to what extent should the domestic solar panel manufacturing market be the sole beneficiary of that investment?

Industry reaction to the DCR regime in general has not been particularly positive. India's solar manufacturers still largely assemble products with core materials, (such as poly-silicon chips) purchased mostly from China.

As a result, Indian solar cells and modules end up becoming up to 10 per cent more expensive than those imported from China, Malaysia or Taiwan, countries from where most solar developers in India source their modules. Moreover, Indian solar cells are generally thought to be technologically inferior to those manufactured in other countries.10

DCRs therefore, perpetuate a cost for SPDs and although guaranteed PPAs may to a certain extent off-set that cost, it impacts dynamics for the cost of electricity in the consumer market. This could in the long run lead to generation of solar power being economically unfeasible.

Certain industry experts11 take the view that the DCRs actually have little long-term benefits for domestic manufacturers. What is needed is a broader structural approach that would genuinely address domestic manufacturers' constraints and enable them to become cost-competitive in the international market.

Ultimately, producers of solar energy should have the freedom to import technology and materials, such as solar cells and modules, if importing is cost-efficient. Removing barriers to trade might attract more foreign and domestic investment in the solar sector leading to increased investment in the manufacturing of solar cells and modules.12

Following more investment in this sector, market forces will likely lead to a situation where solar power developers choose to buy domestically-manufactured solar cells and modules as a prudent business decision, without external pressure.


1. Press Information Bureau Press release dated January 15, 2016;

2. Resolution, Jawaharlal Nehru National Solar Mission, Ministry of New and Renewable Energy, January 11, 2010

3. Guidelines for Selection of New Grid Connected Solar Power Projects, Ministry of New and Renewable Energy (July 2010) ("Phase I (Batch 1) Guidelines").

4. WTO, India- Certain Measures Relating To Solar Cells And Solar Modules, Report Of The Panel dated February 24, 2016;

5. Solar Energy Corporation of India. The government agency responsible for facilitating the implementation of JNNSM and achievement of targets set therein.

6. Article III of the GATT 1994 is titled "National Treatment on Internal Taxation and Regulation". Paragraph 4 of Article III provides in relevant part:

The products of the territory of any Member imported into the territory of any other Member shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

7. Article XX (j) establishes a general exception for measures essential to the acquisition or distribution of products in general or local short supply.

8. Article XX (d) establishes a general exception for measures necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of GATT, 1994.





The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
S.S. Rana & Co. Advocates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
S.S. Rana & Co. Advocates
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions