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India confronts US, EU at WTO over national solar power generation programme

According to reports, India has stoutly defended its national solar power generation programme at the World Trade Organisation (WTO), where the US and the EU raised objections to its requirement of mandatory use of locally-made equipment.

India refuted allegations at a recent meeting of the WTO’s committee on trade related investment measures, or Trims, that the Jawaharlal Nehru National Solar Mission violated global trade rules, a government official told ET.

“The mandatory use of solar modules manufactured in India, in the project, and the 30% local sourcing requirement is to give a boost to the nascent domestic industry and make non-renewable energy more affordable in the long run,” the official said.

Along with the EU, the US, which has also taken up the issue bilaterally with India, raised the issue at the WTO meeting on Trims saying the mission requirements prevent them from exporting their technology and equipment.

India has, however, maintained that it is within its rights to lay down such guidelines for its energy security, especially since other countries like Canada and Italy also encourage local procurement for solar projects.

Yet, India is firming up its defence in case the US or the EU decides to lodge a formal complaint against the solar mission.

Japan has recently lodged a formal complaint against Ontario, Canada, at the WTO for establishing a feed-in tariff program, in which electricity generated by using renewable energy is subsidised. The programme favours equipment made in Ontario. “Although, in Canada’s case local purchase is linked to tariff concessions, the basic regulatory requirement is similar in both countries,” a Delhi-based trade lawyer who did not wish to be named said.

“One could also argue that since NTPC, which is a public sector body, will purchase solar power generated by the projects, it could amount to government procurement which is not bound by WTO rules,” the lawyer said. He added that the Trims rules prohibiting local sourcing can be interpreted variously.

The national solar mission was launched last year to promote use of solar energy as part of the government’s initiative under the national action plan on climate change. While investors in the solar projects will get incentives, such as relief on import duty for capital goods and exemption from excise on inputs, the government has put in place clauses of compulsory domestic sourcing of inputs, which will differ in the three phases of the mission.

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