The US on Monday announced it was going to the World Trade Organisation seeking consultations with India on its “domestic content requirement” for solar panels.
This has been an ongoing trade issue between the two countries, with the US first taking it to WTO in February 2013. The rules have changed since, but not enough from the US point of view.
“These unfair requirements are against the WTO rules, and we are standing up today for the rights of American workers and businesses,” said US trade representative Mike Froman.
Under the “domestic content requirement” rule, India expects foreign suppliers to use specified locally sourced components such as cells and thin-films used in solar panels.
“Consultation” is the first stage in WTO’s dispute settlement process that allows countries to resolve the matter bilaterally through negotiation within 60 days.
Failure can lead to adjudication by a panel. India and the US have had 14 past or current WTO disputes.
US officials insisted the timing of the current action had nothing to do with the state of bilateral ties recovering from the Devyani Khobragade imbroglio, the worst point since 1998.
Officials also insisted they did not see it as the start or continuation of a trade war. These things happen in a “mature” trade relationship, said an official on background.
US businesses have in recent days brought on unprecedented pressure on their government and lawmakers to force India to yield on trade issues they find discriminatory.
Their main grouse is India’s patent regime.
On solar panels, the US contends that India’s “domestic content requirements” of solar panel components discriminate against American companies, which together employ 10,000 people.
US exports of solar panels to India in 2011, before the start of the domestic content requirements, were worth $119 million, not a great sum when bilateral trade is $67.3 billion a year.
The size of the current Indian market, therefore, is not as much a worry as where it’s going: the Indian solar power generation industry is expected to grow 20 times.