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U.S. issues new challenge to Indian solar

February 10, 2014

By ERIC BRADNER

The United States is launching another challenge to New Delhi’s efforts to boost its solar energy sector by requiring the industry there to use Indian-made equipment, to the chagrin of U.S. manufacturers.

U.S. Trade Representative Michael Froman said Monday that President Barack Obama’s administration is filing a new case at the World Trade Organization, seeking consultations over whether India’s program violates its international trade obligations.

“These domestic-content requirements discriminate against U.S. exports by requiring solar power developers to use Indian-manufactured equipment instead of U.S. equipment,” Froman said.

It’s the second time the United States has challenged India over the program. The first came a year ago, and was met with a rebuke from Indian officials who accused the United States of hypocrisy, citing state and local programs that favor homemade clean-energy products.

Froman said a new case is necessary because India is ramping up its solar program, shifting last October into the second phase of its implementation. The new phase also covers thin film solar cells, which account for most U.S. solar exports to India and had initially been exempted from India’s local-manufacturing requirements.

Froman said the India’s Jawaharlal Nehru National Solar Mission, which launched in 2010, will “actually impede India’s deployment of solar energy by raising its cost.”

U.S.-based business groups have criticized the program as well. The Information Technology and Innovation Foundation dubbed India’s program “green mercantilism” in a report it published in 2012.

“We were hoping that India would change its phase two, which was under development even at that time,” an attorney for the USTR said on the condition of anonymity.

“We hope, through these consultations, that our concerns with both sets of consultation requirements can be resolved with India,” the attorney said.

The United States is requesting consultations at the Geneva-based WTO, Froman said, giving the two countries a 60-day window to settle the dispute. If they fail to do so, the United States could then ask the WTO to create a compliance panel to rule on the case. If that panel were to rule against India, Washington could retaliate by imposing punitive measures such as tariffs.

Press officials at the Indian embassy in Washington did not respond multiple messages seeking comment on the United States’ latest complaint.

The international trade dispute could further complicate relations between the two countries, which have soured in recent months.

It comes just weeks after the row triggered by the United States’ decision to arrest and strip-search an Indian diplomat in New York. The diplomat was accused of committing visa fraud to get her housekeeper, who was paid less than the U.S. minimum wage, into the country.

Lawmakers and business groups in Washington have long complained that U.S. businesses are treated unfairly by India. Drugmakers have howled after New Delhi officials stripped their patent rights for cancer drugs, allowing Indian generic companies to sell the same products for much lower prices. Retailers like Walmart have struggled to break into the country largely due to policies that restrict foreign ownership of such outlets. And manufacturers say local-content requirements similar to those cited in the solar dispute are rampant in India’s telecommunications industry.

“India’s forced localization policies unfairly discriminate against manufacturers of a wide array of products,” said Linda Dempsey, the vice president of international economic affairs for the Washington-based National Association of Manufacturers.

She called the new U.S. complaint “an important step toward leveling the playing field for solar equipment manufacturers and workers in the United States. We look forward to similar concrete action to address Indian government policies that are discriminating against other products and sectors.”

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