India is delaying a decision on asking for a dispute settlement panel at the World Trade Organisation against domestic content regulations in renewable energy programmes run by eight states in the US as it is hoping to work out a “mutually beneficial’’ solution with the new regime under Republican leader Donald Trump.
“New Delhi is still hopeful that it could work out a compromise with Washington on the flexible implementation of the WTO verdict against it in the solar power programme dispute. It may decide not to ask for a panel against US renewable energy programmes if it gets an assurance from the Trump administration on leniency in the solar case,” a government official told BusinessLine.
Last year India lost a case filed by the US against compulsory domestic sourcing of solar panels and solar modules under its national solar power generation programme — the ambitious Jawaharlal Nehru National Solar Mission (JNNSM). It also lost an appeal against the verdict filed with the WTO’s appellate body.
“The term of implementation of the verdict, including the reasonable period of implementation, is very important for India as it could have a strong impact on the successful completion of the JNNSM,” the official said.
India feels that the Trump regime may oblige as it has a strong case against the domestic content requirements and subsidies provided by eight US states (Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota) in the renewable energy sector. “Since we lost the case against domestic content requirement in our solar energy programme, there is a good chance that the US, too, would lose the case if we ask for a panel,” the official said.
Although, the verdict against India in the JNNSM case cannot be reversed, the way it is implemented could make a big difference. For instance, if the US is generous and allows India the longest time-period of 15 months (permitted by the WTO under exceptional circumstances) for implementation of the verdict, it might be able to complete the second phase of the JNNSM without any changes in the domestic content requirement norms.
New Delhi also wants that the US should not insist that it re-work all power generation contracts with domestic content clause which are valid for periods that run beyond the agreed implementation period. “If contracts have to be re-worked, it would hit the mission seriously,” the official said.
While the JNNSM aims to add 100,000 MW of solar power by 2022, the local content requirement is only for 8,000 MW for rooftop and land-based projects where the government provides a subsidy.