• The World Trade Organization (WTO) appellate body has adjudged India’s domestic content requirement policy as going against international agreements
  • This was the last time the Asian nation could appeal to the WTO in this case, after having lost the previous hearing in February 2016
  • Indian solar association says that in the long run this WTO ruling won’t matter as Indian companies have started venturing into setting up their own fully integrated manufacturing facilities
  • Solar power project developers in India that source from foreign nations now fear retaliatory anti-dumping duties on those products

As expected and predicted, India has lost the final set against the US regarding its domestic content requirement (DCR) for solar cells and modules (see WTO Ruling Expected In September). On September 16, 2016, the World Trade Organization (WTO) appellate body issued its final report stating that it upholds the earlier decision of the WTO panel in the case.

The US had won the first round in the case it filed against India’s DCR policy under Phase-II of the Jawaharlal Nehru National Solar Mission (JNNSM) in February 2016, when the WTO panel judged India’s DCR policy violating international agreements. India makes it mandatory for project developers to source 10% of the modules used in solar power plants locally.

The case, which started in 2013, went trough several phases – from trying to arrive at a mutually agreeable solution (see India-US Trade Dispute) to India’s government filing a case against US’ policy of protectionism to its own industries in eight states in the North American nation.

The WTO Panel “sustained the United States’ claims that India’s DCR measures are inconsistent with WTO non‑discrimination obligations.” It also found that the “measures are not covered by the government procurement exemption, because the product being procured (electricity) was not in a ‘competitive relationship’ with the product discriminated against (solar cells and modules).” Moreover, the Panel “found that India had not demonstrated that its measures are justified, (and) applicable to measures that are essential to the acquisition or distribution of ‘products in general or local short supply.'”

India’s delayed response to the US case is something that played a big role in putting it at a disadvantage. Given the humungous target of 100 GW solar capacity by 2022 with only a little over 8 GW having been installed so far, Indian cell and module manufacturers’ capacities are only able to cover a fraction of demand today.

However, speaking to Indian business daily, The Economic Times (ET), National Solar Energy Federation of India (NSEFI) Chairman Pranav Mehta said that Indian companies have started venturing into setting up their own fully integrated manufacturing facilities. Hence, the WTO ruling would not negatively impact the local industry in the long run.

Nevertheless, solar power project developers are concerned about the Indian government imposing retaliatory anti-dumping duties on foreign modules.