India has been pushing for a greater role for solar energy in the country. But is it not playing by the rules? Does India’s national solar programme[1] discriminate against foreign solar products in violation of a core global trade rule?

The United States thinks so, as its trade officials have filed a case against India[2], arguing that their government’s solar programme favours their own products and discriminates against imports from the United States.

According to U.S. Trade Representative Ron Kirk, the United States is asking the World Trade Organisation (WTO) to begin to dispute settlement consultations[3] over India’s three-year-old national solar programme, which they contend is requiring solar companies to buy only Indian-made solar products while offering subsidies to companies that make those purchases.

“Let me be clear, the United States strongly supports the rapid deployment of solar energy around the world, including with India. Unfortunately, India’s discriminatory policies in its national solar programme detract from that successful cooperation, raise the cost of clean energy[4] and undermine progress toward our shared objective,” Kirk said in a statement.

It would be interesting to see how true is the U.S. allegation of India unduly favouring local solar energy producers, especially at a time when Obama Administration is tackling such barriers as a top priority!

Does this also mean that renewable energy is now acquiring a place as important as being the new battleground in global trade? Or the latest dispute will be just confined to being a sign of trade tension only between India and the United States?[5]

“The Obama Administration is committed to strengthening the American clean energy sector and preserving the millions of jobs it supports,” said Kirk, adding that “Trade enforcement is critical for ensuring that our clean energy goods and services can compete on an equal footing around the world.”

Kirk said the U.S. action demonstrates “we will not hesitate to enforce our rights under our trade agreements on behalf of American workers and manufacturers.”

The United States says it has engaged India on its concerns regarding the solar programme over the last three years, including in bilateral fora such as the U.S.-India Trade Policy Forum and the U.S.-India Energy Dialogue, and at the WTO in various committees.[6]

Interestingly, the U.S. has imposed tariffs of up to 250 per cent on solar imports from China, after claiming the country’s manufacturers had benefitted from government subsidies and dumped products on the American market at below the cost of production.

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[1] The U.S. action targets India’s national solar programme, the Jawaharlal Nehru National Solar Mission (NSM), launched in 2010.

[2] The United States, on 6 February 2013, notified the WTO Secretariat of a request for consultations with India on certain measures of India relating to domestic content requirements under the NSM for solar cells and solar modules.

[3] Consultations are the first step in the WTO dispute settlement process, and parties are encouraged to agree to a solution at this stage. The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.

[4] The case comes as a number of governments, including the United States, are supporting development of clean energy to reduce dependence on fossil fuels and to cut greenhouse gas emissions blamed for global climate change.

[5] India and the United States have in the past year filed a series of trade cases against each other before the World Trade Organisation.

[6] The United States is party to numerous trade agreements with other countries, and is participating in negotiations for new trade agreements with a number of countries and regions of the world. The Office of the U.S. Trade Representative (USTR) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues.

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The Jawaharlal Nehru National Solar Mission was launched on the 11th January, 2010 by the Prime Minister. The Mission has set the ambitious target of deploying 20,000 MW of grid connected solar power by 2022 and is aimed at reducing the cost of solar power generation in the country through (i) long term policy; (ii) large scale deployment goals; (iii) aggressive R&D; and (iv) domestic production of critical raw materials, components and products, as a result to achieve grid tariff parity by 2022. Mission will create an enabling policy framework to achieve this objective and make India a global leader in solar energy.

The National Solar Mission is a major initiative of the Government of India and State Governments to promote ecologically sustainable growth while addressing India’s energy security challenge. It will also constitute a major contribution by India to the global effort to meet the challenges of climate change.

In launching India’s National Action Plan on Climate Change on June 30, 2008, the Prime Minister of India, Manmohan Singh stated: Our vision is to make India’s economic development energy-efficient. Over a period of time, we must pioneer a graduated shift from economic activity based on fossil fuels to one based on non-fossil fuels and from reliance on non-renewable and depleting sources of energy to renewable sources of energy. In this strategy, the sun occupies centre-stage, as it should, being literally the original source of all energy. We will pool our scientific, technical and managerial talents, with sufficient financial resources, to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people. Our success in this endeavour will change the face of India. It would also enable India to help change the destinies of people around the world.

Farooq Abdullah, Union Minister for New and Renewable Energy in a statement in Parliament on 23rd November, 2009, said: The Government has approved a new policy on development of solar energy in the country by launching of the Jawaharlal Nehru National Solar Mission. This is a historic and transformational initiative of the UPA Government and I am proud to have the privilege of being assigned the task of overseeing its implementation. The Solar Mission is very much in line with the vision of modern India of Pandit Nehru, which has made India today, a leading nuclear and space power.