World Trade Organization (WTO) judgment on India-US solar case was finally been made public on Feb 24th 3 years after the US challenged New Delhi’s policy for solar projects to source at least half their content from local producers to qualify for Indian government support and encourage domestic manufacture. The judgment prevents India from doing so and concludes that domestic content requirements set by India for the initial phases of its National Solar Mission violate international trade agreements. It recommends that India should bring its measures into conformity with its obligations under the TRIMs Agreement and the GATT 1994. In the particular the judgment is not an negative for Indian Govt as buying solar equipment at this time may be better than building plants that make it given the rapid evolution of technology and the financial problems of our power sector. But in the general, this judgment is harmful, as it brings into consideration the larger issues of climate change politics and global trade regimes which create distortions that favor rule-makers. Even India’s Power Minister Piyush Goyal has called out at a conference in Delhi this week, the hypocrisy of the US. position which violates the spirit of the climate change talks.
This is where India must get proactive. In the recently concluded Paris Climate Talks, India was painted as a spoiler for not agreeing to take responsibility for climate change caused by the developed world and China. There was pressure on India to renounce coal a critical and cheap energy source compared to the more expensive solar energy. Despite bearing little responsibility for climate change, India still voluntarily declared climate change mitigation goals, including a target of 100,000 megawatts of solar power capacity by 2022. This is a $50 billion opportunity for solar equipment-makers worldwide – and given the WTO judgment, India will not be able to leverage it to create a domestic solar manufacturing base. Instead, the high-tech manufacturing jobs will be created elsewhere – in places such as the US. While climate change talks and WTO are independent of each other, the two combined have managed to generate an outcome that favours markets like the US.


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