Recently, the World Trade Organization (WTO) ruled against India’s domestic content requirements for large solar development projects, which enjoy subsidies and guaranteed government procurement if they use locally manufactured equipment. The case was filed by the US in 2013 to have India remove any disadvantages to imported solar equipment.

India’s ambitious National Solar Mission envisages solar electricity production of 100 GW by 2022, up from the current 5 GW. Achieving this requires access to affordable equipment and the domestic renewable energy industry would find it impossible to stay afloat without economic incentives. While a scale-up of climate policy is required, the WTO ruling is largely set to pose a hindrance to the process.

In response to the ruling, India has offered to modify the “buy local” provisions. It has proposed restricting the rules to apply to solar equipment manufactured for public use, such as defence and railways instead of electricity on a whole. This falls within the purview of GATT, where governments can favour domestic products if the procurement is “not with a view to commercial resale”.

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Source: The Hindu Businessline

The case sheds light on the US’ double standards where 23 states have “buy local” incentives in place to make the shift to a clean energy economy. In addition, President Obama had supported India’s low-cost solar mission. What we see is a classic case of developing nations coming in the way of emerging economies’ efforts towards climate change.

The ruling could also provide a setback to other solar plans and initiatives such as the International Solar Alliance of developing countries, which relies heavily on the access to affordable solar equipment, a central tenet of which is a domestic manufacturing industry.

WTO’s move is widely being seen as an obstruction to the country’s initiatives to achieve its renewable energy goals.

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