US targets India's NSM at WTO

The United States has brought a World Trade Organization case against India, alleging that its domestic content requirements for a national solar program discriminate against American suppliers.

The program in question is Phase II of India’s National Solar Mission (NSM), which requires participating developers to utilize Indian-manufactured solar cells and modules.

The US in February 2013 had filed a complaint against Phase I launched in October 2010, but the two sides were unable to resolve the dispute.

“These unfair requirements are against WTO rules. We are standing up today for the rights of American workers and businesses,” says US Trade Representative Michael Froman.

“We also take this action in support of the rapid global deployment of renewable energy.  These types of ‘localization’ 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,” he adds.

NSM is India’s national program to promote the development of solar power generation facilities. Last October, India’s cabinet approved measures governing the implementation of Phase II.

Froman says under Phase II, domestic content requirements were expanded to cover thin-film technology, which has been exempt under the initial phase. Thin-film currently comprises the majority of US solar product exports to India.

He argues Phase II will cause greater harm to US producers than Phase I, which had required solar power developers using crystalline silicon technology to use Indian-made solar modules. This was later extended to crystalline solar cells as well.

The Solar Energy Industries Association (SEIA) told the Wall Street Journal that it estimates India’s rules put $200m to $300m in US exports at risk.

The US request for “consultations” is the first step in the WTO dispute settlement process. They 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.