WTO rules against India in solar power case; favours US view

Pic for representational purpose only

Geneva: Ruling against India, the WTO Wednesday said the government's power purchase agreements with solar firms were "inconsistent" with international norms -- a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms.

The US had dragged India to the World Trade Organisation (WTO) on this issue in 2014, alleging that the clause relating to domestic content requirement (DCR) in the country's solar power mission were discriminatory in nature and "nullified" the benefits accruing to the American solar power developers.

After looking into the matter, the WTO's Dispute Settlement Panel has ruled that "the DCR measures are inconsistent" with relevant provisions of TRIMs (Trade Related Investment Measures) Agreement and with the articles of the erstwhile GATT (General Agreement of Trade and Tariffs).

The panel also found that the DCR measures accorded "less favourable treatment" to the American companies and were "not justified" under the general exceptions in GATT rules.

India can challenge this ruling before the appellate body of the WTO.

The dispute relates to the domestic content requirements imposed by India for the National Solar Mission, including in the the Guidelines and Request for Selection documents, the model power purchase agreement, and the individually executed power purchase agreements between Indian government agencies and solar power developers.

Asking India to "bring its measures into conformity with its obligations under the TRIMs Agreement and the GATT 1994", the panel said that "in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment".

"We conclude that, to the extent that the measures at issue are inconsistent... (with the relevant articles of the TRIMs Agreement and the GATT 1994), they have nullified or impaired benefits accruing to the United States under those agreements," it added.

The panel found that DCR measures are not distinguishable in any relevant respect from the domestic content requirements previously examined under this provision by the Appellate Body in Canada ? Renewable Energy / Feed-In Tariff Programme.

"In particular, the panel found that the electricity purchased by the government is not in a "competitive relationship" with the solar cells and modules subject to discrimination under the DCR measures," the findings said.

On January 11, 2010, India had launched its national solar policy, named Jawaharlal Nehru National Solar Mission.

The country has an ambitious target of generating 20,000 Mega Watts of solar power by 2022.