WTO Says India Needs to Consider US Suppliers for Massive Solar Project

India has lost a case against the US at the World Trade Organization over protection for local crystalline silicon and thin-film solar cells.

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The WTO ruled that India’s domestic content requirements under its new solar power program were inconsistent with international agreements. Indian officials have said they will appeal the ruling to the WTO’s dispute panel in the next two months.

Solar Panel array
Photovoltaic solar array, the kind US manufacturers would love to send to India.

The US alleged that India’s ambitious solar program discriminates against US crystalline silicon photovoltaic and thin-film solar panel manufacturers by requiring Indian producers to use locally manufactured silicon or thin-film cells and by offering subsidies to those developers who use domestic equipment.

The US also said the forced localization requirements restricted US exports to Indian markets. The panel struck down the Indian government’s incentive policies, especially subsidies provided for domestic solar companies for manufacturing the cells.

India’s Big Solar Investment

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

Its target is generation of 20,000 megawatts of solar power by 2022 is a virtual boon to US solar cell and module producers. Companies such as Solarworld USA and First Solar see India’s massive solar parks as a once in a lifetime business opportunity and, sure, they want to be a part of it, but taking the case to the WTO over local incentive programs could come back to haunt US producers of other metals.

Incentives vs. Requirements

There are incentive programs on the state and national level for using local products in the US. Nationally, the LEED (Leadership in Energy and Environmental Design) standard from the non-profit US Green Building Council, for example, gives credit for any materials or products that  have been extracted, harvested or recovered, as well as manufactured, within 500 miles of the project site.

To be fair, the US producers do not want to “dump” solar cells into India and aren’t offering any incentives to export programs, what the US alleges India and other nations are doing with several types of  foreign steel being imported to the US.

The US producers merely want to be able to compete in India with manufacturers of solar cells and modules that have operations there. What the WTO essentially said, is that, just like export subsidies, a government cannot give too much of a preference for locally produced materials, as well. This includes requiring Indian solar cells. The Indian government also cannot, according to the WTO, REQUIRE the builders to only specify and purchase local materials.

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In this situation, New Delhi may have wanted to take a page out of the USGBC’s book and find incentives, rather than requirements, to give to local solar producers.

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