In response to the complaint lodged by the US against India's National Solar Mission, World Trade Organisation (WTO) said that certain provisions of India's National Solar Mission were actually inconsistent with international trade norms.
The ruling came from a three member panel which was chaired by former New Zealand trade envoy David Walker.
The biggest problem that the US has with India's National Solar Mission is that India seeks to install 100 gigawatts of solar capacity by 2022 and for that it has made it mandatory that a certain percentage of cells and panels should be manufactured locally.
As being part of WTO means that a country cannot put such domestic content requirements India as per WTO has flouted the rule. As per WTO all countries should be open to trade every time else the country is dubbed as one that is following protectionism. This comes under Article 2.1 of the Trade-Related Investment Measures (TRIMS) and Article lll 4 of the General Agreement on Tariffs and Trade (GATT) 1994.
The ruling came after a delay of two months as India and the US were unable to come to an agreement on the changes suggested by India to its solar power programme.
Reaction of US solar industry leaders
The US solar industry leaders who gain from this ruling as they will get to sell their components were obviously appreciative of it.
US Trade Representative's (USTR) Office called a ruling as a major victory that would speed up the spread of solar energy across the globe and it will also help increase clean energy jobs in the US.
USTR's Michael Froman said, "This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory ‘localisation' policies".
Dan Whitten, vice president of communications for the Solar Energy Industries Association, "This decision helps us bring clean energy to the people of India, as that nation's demand for electricity rapidly grows".
Response of climate change advocates
Advocates of climate change were not happy with the WTO ruling and called it a harsh kick on the gut to climate co-operation. The advocates went to extent of calling out the US hypocrisy as during Paris climate talk the nation pushed for big policy changes and when it comes to really appreciating efforts from emerging nations like India the US reacts in very different way.
The other point here that needs to be brought out is that almost half of all the states in the US also provide some degree of subsidy for the use of local renewables.
Ilana Solomon, director of Sierra Club's Responsible Trade Programme, on the preliminary ruling when it was issued in August last year had said, "
Sam Cossar-Gilbert, a program coordinator at Friends of the Earth International said, "The ink is barely dry on the U.N. Paris Climate Agreement, but clearly trade still trumps real action on climate change".
He further added, "Trade policies are preventing a sustainable future."
Canada too had faced such an ire in 2012
This is not the first time that WTO has ruled in such a manner. In 2012 in response to a complaint filed on behalf of Japan and the EU, it had ruled against the government of Ontario's green energy program which incentivised renewable producers to source goods and services from inside the province.
Future course for India
India has an option to appeal against the WTO ruling. India can appeal to the WTO Appellate Body however, it has to be noted here that when Ontario government had appealed against WTO's 2012 ruling Canada had lost.