U.S. Wins WTO Solar Panel Case against India

February 26, 2016Political Economyby EW News Desk Team

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On Wednesday, the World Trade Organization (WTO) announced its ruling in a case brought by the United States against India. In the case, the U.S. argued that India imposed unfair trade restrictions designed to deny foreign manufacturers from equal access to Indian markets in contradiction of WTO rules.

More specifically, the United States filed its action against India over rules requiring that solar panels and modules contain a certain percentage of locally manufactured content. The WTO sided with the United States, holding the Indian laws amounted to a violation of WTO requirements. 

Analysts argue that this ruling will ultimately be a huge benefit to Indian consumers. They will no longer be deprived the opportunity to purchase better and cheaper panels from foreign manufacturers simply because they do not contain a certain amount of domestic content; and in many ways, this is precisely why the WTO's rules are so crucial to the everyday consumer.

Although local producers will no longer benefit from the protections India's government had created for them, the end users of this merchandise will have access to products at better prices from foreign manufacturers. 

The offending rules were part of India’s National Solar Mission, a power program designed to harness the benefits of solar energy for both the government and its people.  The ruling came down from a World Trade Organization Dispute Settlement Panel, and held that India's actions amounted to a form of economic discrimination against U.S. solar exports.

The U.S. Trade Representative (USTR) relayed this information to the press. In making its ruling, the WTO Dispute Settlement Panel agreed with the United States that India’s "localization" rules amounted to de facto discrimination against imported solar cells and modules. The localization rules came under India’s National Solar Mission. 

Some in the local market consider the WTO ruling little more than a setback to India's solar industry. The USTR, however, suggests that the ruling is not a setback to India at all, but instead a huge ruling in India’s favor. India's solar industry has grown quite rapidly over the last several years under the government's protection.

Although the government argued that its policy was necessary in order to protect its domestic solar power industry and ensure compliance with requirements designed to promote sustainable development, the WTO disagreed. It believed the Indian solar power industry had grown sufficiently strong to compete in the international market place without protection from the government. Instead, it found the rules simply favored local makers over foreign ones to the detriment of both foreign manufacturers and domestic consumers.

India has already announced that it plans to appeal the ruling. That move could prevent enforcement for months or even years.