India has lost the solar energy dispute against the US at WTO. The case was filed by the US against India’s decision for local content requirement in the supply of solar energy project items.
US argument was that India’s policy of instructing local content is against the WTO’s non-discriminatory principles.
The case was initiated by the US in 2013. Consultations between the two countries failed to settle the issue. India has used its right to stop the movement of the dispute further by blocking the panel appointment. But second time as the provision, India was not able to block the referral to the case to the panel.
Hence, the WTO has referred it to the dispute to a dispute settlement panel. Verdict of the panel is binding for India.
The WTO’s procedure allows India to go for appeal against the report of the panel. It is known that the government is moving for the appeal.
But still, chance is that the DSB may defend the report of the panel. In that case, government should withdraw the local content requirement under the National Solar Mission.
India has launched the Jwaharlal Nehru National Solar Mission in 2010. The target under the scheme is to generate 20000 MW grid linked energy by 2022.
Regarding solar energy equipments, most of the solar energy equipments are imported. A major supplier of such equipment is China which is known for cheap sourcing.
Local content requirement for the project was set at 30% to encourage value addition as well as to reduce the burden of foreign exchange payment. It is believed that when completed, the project will cost around $ 5 billion. In the present dispute with the US, other countries including China, EU, and Japan etc joined as third parties.