The World Trade Organisation appellate body has upheld an earlier ruling against India’s domestic content requirements for manufacturing solar cells and modules, the WTO said on Friday. The solar dispute arose from a complaint lodged by the US against India in 2013 for violation of global trading rules. Earlier this year, a WTO dispute settlement panel had ruled that India’s domestic content requirement (DCR) for the solar sector is inconsistent with its treaty obligations. Summarising the key findings of the appellate body report that was circulated to members on Friday, WTO said: “The Panel sustained the United States’ claims that India’s DCR measures are inconsistent with WTO non-discrimination obligations under Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement.
“The Panel also found that the measures are not covered by the government procurement exemption under Article III:8(a) of the GATT 1994, because the product being procured (electricity) was not in a ‘competitive relationship’ with the product discriminated against (solar cells and modules).” The national treatment obligations required India to treat imported solar cells and modules on par with domestically produced products without any discrimination under Article III:4 of the GATT 1994. The highest adjudicating body for global trade disputes agreed with the panel that India’s domestic content requirements for solar cells and modules under the Jawaharlal Nehru Solar Mission amounted to trade-related investment measures as they favour domestic products over imported products.
The domestic content requirement clause under India’s national solar programme, launched in 2010, is aimed to protect and encourage local industry. It mandates that a solar power producer compulsorily source a certain percentage of solar cells and modules from local manufacturers in order to be able to benefit from the government guarantee to purchase the energy produced. America and the European Union themselves have taken anti-dumping measures against cheaper Chinese solar panels in order to protect their own industries. Earlier this month, India lodged a complaint against the US at the WTO alleging that the latter’s domestic content requirements and subsidies of eight American states – Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota – for renewable energy violated core provisions of global trade rules. India expects to add around 5.5 GW of solar capacity in 2016, making it the fourth-largest solar market globally.