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The US Said India's Solar Power Plan Discriminates Against American Companies — And the WTO Agrees

America’s two largest manufacturers of solar panels, First Solar and Sun Power, have big stakes in the Indian market.
Photo by Sanjeev Gupta/EPA

At the behest of Uncle Sam, the World Trade Organization (WTO) has spiked parts of a plan to spread solar energy across India — where more than 300 million people lack electricity.

Yesterday, a WTO arbitration panel sided with the United States, which in 2013 complained that India's massive initiative to develop solar power discriminates against American business. The US government and solar industry have greeted the decision as victory for free trade and as warning to other countries pondering protections for domestic industry — but environmental groups argue the decision handicaps India's efforts to grow its own sustainable energy sector.


"This is an important outcome, not just as it applies to this case, but for the message it sends to other countries considering discriminatory 'localization' policies," said U.S. trade representative Michael Froman.

The policies in question come as part of India's National Solar Mission, a government initiative to up the country's solar electricity output and lower power prices. The project is a core component of the India's commitments to the United Nations Paris climate deal and aims to reach 100,000 megawatts of solar capacity by 2022, over 40 percent of its present electrical production. But the present plan requires that 10 percent of this power comes from domestically produced solar panels and cells, a practice the WTO found to be unjustified, uncompetitive, and "inconsistent" with international agreements on trade and tariffs.

Related: Coal and Solar Energy Are Neck-and-Neck in the Developing World

Lobbyists for the American solar industry said that the ruling removes an obstacle to the presence of American business in the Indian market. The "decision will clear the way for significant and rapid deployment of solar energy in India and can create jobs at home," said Solar Energy Industries Association spokesperson Dan Whitten.

But Ilana Solomon, director of the Sierra Club's Responsible Trade Program, said that the American industry already has a large and growing presence in India's solar sector and that the 10 percent domestic production quota was important for India's economy.


"By no means has India closed its market to foreign competition," said Solomon. "This is about a country's ability to strike a balance between importing and growing a domestic manufacturing industry."

Indeed, America's two largest manufacturers of solar panels, First Solar and Sun Power, have big stakes in the Indian market. Last year, First Solar announced that one of its power plants had won a 20-year contract to provide power in a southern Indian state as part of its "shared vision" to "meet India's growing demand for sustainable, renewable energy."

A First Solar spokesperson decline to comment on the WTO ruling.

In India, environmental pollution from dirty energy sources has created devastating pollution, which, according to recent study, contributed to 1.4 million premature deaths in 2013. The casualties are disproportionately among the country's poor, and India, like many impoverished countries, is puzzling over how to pull its populations out of poverty while leap-frogging the dirty power sources that drove the Industrial Revolution to cleaner energy, like solar.

Related: Air Pollution Kills 5.5 Million People a Year — Over Half of Them in China, India

Indian officials could not be reached for comment on the WTO's decision, but the country has the option of appealing the panel's ruling.

The Sierra Club's Solomon argued that limited protections for Indian solar panel producers would serve the twin aims of creating jobs and greening the country's power grid.

"This shows that countries do not have the flexibility under the WTO to set the path that it thinks is best to scale up renewable energy to combat climate change," she said.

Follow Jake Bleiberg on Twitter: @JZBleiberg