India’s Solar Panel Dispute: A Need To Look Within
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From: CUTS International
India’s Solar Panel Dispute: A Need To Look Within
By Pradeep S Mehta and Smriti Bahety
The Wire
March 15, 2016
While the WTO decision on India’s solar programme may have been a hit to the ‘Make in India’ campaign, it is difficult to state that the country’s domestic content requirements were the least trade-restrictive alternative to achieve the goal of clean energy.
The ‘Make in India’ initiative took a new hit when the World Trade Organization (WTO) dispute settlement panel ruled that India cannot discriminate between foreign and domestic suppliers of components for solar panels used by solar power developers in India. A closer look at the case reveals that we are not allowed to discriminate. That being the case, what’s the way forward?
Outcome of the decision
On February 24, a panel of the WTO found that India’s domestic content requirements (DCR) under the Jawaharlal Nehru National Solar Mission (JNNSM) violates its commitments under the global trading rules, specifically the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade Related Investment Measures (TRIMs).
The JNNSM was launched by the government in 2010 in order 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”. In order to boost the capacity of indigenous industries, the government mandated the solar power developers to use cells and modules manufactured in India in different phases of the project and the government would, in turn, buy the electricity thus produced at a fixed rate for 25 years.
The United States argued, and the WTO panel agreed, that by imposing DCR, India accorded imported solar cells and modules less favourable treatment than similar products manufactured in India.
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http://thewire.in/2016/03/15/indias-solar-panel-dispute-a-need-to-look-within-24787/CUTS-TradeForum
From: CUTS International
What the WTO panel did not decide on solar panels
By Prabhash Ranjan and Deepak Raju
The Financial Express, New Delhi
March 16, 2016
Its decision is neither a case of trade trumping environment, nor does it go against India’s energy security goals or Make-in-India
The recent World Trade Organisation (WTO) panel decision that certain domestic content requirements (DCRs) in the Jawaharlal Nehru National Solar Mission (JNNSM) violate India’s WTO obligations has kicked up a storm on whether the WTO unduly encroaches upon India’s sovereign policy choices, such as pertaining to the environment? One major reason for the debate is that this is the second blow to the country’s regulatory measures at the WTO in less than a year. In June 2015, the WTO decided that India’s ban on import of US poultry violated its WTO obligations.
Before we look at the policy issues involved in the solar case, it is necessary to provide a quick background.
Under the JNNSM, the government enters into long-term electricity purchase contracts with eligible ‘solar power developers’, assuring them guaranteed prices for a period of 25 years. The government then sells the electricity to distribution companies who, in turn, sell it to consumers. The key stated objective of the programme is “to promote ecologically-sustainable growth while addressing India’s energy security challenge.” Only those solar power developers who source certain types of solar cells and modules domestically are eligible. It was this DCR in the JNNSM, and not the JNNSM itself, that was challenged as WTO-inconsistent by the US, and ruled to be so by the WTO panel.
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