The U.S. last week called for World Trade Organization (WTO) consultations to settle a dispute in which it alleges that India’s national solar program appears to discriminate against U.S. solar equipment by requiring solar energy producers in the South Asian country to use Indian-made solar cells and modules.

U.S. Trade Representative Ron Kirk said that India offers subsidies to that country’s solar developers for using domestic equipment instead of imports, and that those "forced localization" requirements restrict India’s market to U.S. imports.

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

The two countries are expected to enter consultations, which are the first step in the WTO dispute settlement process. Under WTO rules, if the matter is not resolved through consultations within 60 days, the U.S. may request the establishment of a WTO dispute settlement panel.

India launched its national solar policy, the Jawaharlal Nehru National Solar Mission (JNNSM), in January 2010. Under the first part, the country required developers of solar photovoltaic (PV) projects employing crystalline silicon technology to use solar modules manufactured in India, the U.S. alleges. India expanded this domestic sourcing requirement to crystalline silicon solar cells in the second part of JNNSM as well, it says. "India also offers solar energy developers participating in the JNNSM a guarantee that the government will purchase a certain amount of solar power at a highly subsidized tariff rate, provided that they use domestically manufactured solar equipment instead of imports."

A U.S. solar sector trade association, the Solar Energy Industries Association (SEIA), last week said it wholly backed U.S. efforts to initiate the WTO dispute settlement proceedings against India.

“While we applaud India’s National Solar Mission and its focus on growing a domestic solar manufacturing base, this program must also be consistent with India’s international trade obligations. Unfortunately, the National Solar Mission’s local content requirement unfairly discriminates against U.S. solar cell and module manufacturers. India also appears to be expanding this trade distorting measure, regardless of the U.S. government’s multi-year effort to encourage India to abandon the requirement. As a last resort, the U.S. has been forced to petition the WTO," said SEIA President and CEO Rhone Resch.

He added: “The use of discriminatory localization barriers to bolster domestic interests is a growing trend within the global solar industry which must be reversed. We are hopeful that today’s action by the U.S. government will encourage not only India but other countries contemplating the imposition of localization barriers to focus instead on WTO-consistent government support measures. And we encourage all nations interested in the advancement of solar energy to join together in the development of mutually-beneficial policy mechanisms. A good place to start is the creation of a list of government-supported alternatives to local content requirements."

Sources: POWERnews, Office of the U.S. Trade Representative

—Sonal Patel, Senior Writer (@POWERmagazine)