India Seeks Establishment of Compliance Panel to Resolve Solar DCR Dispute with U.S.

The ongoing trade dispute between the United States and India has taken a new turn. New Delhi has now sought the establishment of a compliance panel to resolve the stalemate between the two countries. India’s move comes after the U.S. alleged that New Delhi had not complied with the rulings of the World Trade Organization (WTO) regarding the protectionist Domestic Content Requirement (DCR) program.

The compliance panel requested by India will help resolve the disagreement between Washington D.C. and New Delhi over India’s compliance with the recommendations and rulings of the WTO’s Dispute Settlement Body (DSB). India has requested that the DSB refer the matter to the original panel for a speedy resolution.

In 2013, the U.S. had requested consultations with India through the WTO regarding India’s DCR program. The DCR program was part of the country’s National Solar Mission which mandated that only domestically manufactured solar cells and modules could be used to build solar projects auctioned under the DCR category. The WTO agreed with the U.S. that India’s DCR program discriminated against American and other imported solar products, like cells and modules, in breach of international trade rules. In June 2017, the U.S. and India had agreed that a reasonable period to implement the DSB’s recommendations would be 14 months and set 14 December 2017 as the final date to end the DCR program. The DCR category projects were implemented in the country to provide a guaranteed market for local solar component manufacturers.

In a statement submitted with the WTO, India stated, “In the event of any disagreement between the parties with respect to the consistency with a covered agreement of measures taken to comply with the recommendations and rulings, the logical course of action is first to have recourse to Article 21.5 of the DSU.”

“Since India considers that it has brought itself into full compliance with its WTO obligations and the United States appears to disagree in its communication of 19 December 2017, the issue of compliance must be decided following the procedures of Article 21.5 of the DSU. In the circumstances of this dispute, therefore, India seeks recourse to Article 21.5 of the DSU to resolve the disagreement over compliance,” the statement added.

In January 2018, a month after the U.S. argued that India did not abide by the solar policy norms prescribed by the World Trade Organization (WTO), India had rejected the US accusation, calling it groundless and vague. The U.S. had requested that the DSB authorize the suspension of concessions or other obligations with India at an annual level based on a formula proportionate to the trade effects caused on U.S. interests by India’s failure to comply.

India has now communicated to the WTO that after December 2016, there have been no Power Purchase Agreements (PPAs) pursuant to Guidelines and Request for Selection documents requiring DCR measures which could be determined to be inconsistent under the DSB recommendations and rulings.

India also informed the WTO that some projects which were initially envisaged under the DCR measures were canceled by the Ministry of New and Renewable Energy (MNRE) on the basis of assessments which suggested that these projects may not be completed within the reasonable period of time.

As reported previously by Mercom, in January 2018, the National Thermal Power Corporation (NTPC) annulled a 250 MW DCR category auction which was held in October 2017.

“As India has complied with the DSB recommendations and rulings in this dispute, prompt findings by the DSB will assist the parties in securing a positive solution to the dispute,” New Delhi’s statement concluded.

Mercom had recently reported that the ongoing trade rift between India and the United has been referred to arbitration, but the complexity of the case suggests that negotiations are likely to extend beyond the standard 60-day arbitration period.

Image credit: Rattan India

Saumy Prateek Saumy has been with MercomIndia.com as a staff reporter covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.