India will be asked by the World Trade Organization (WTO) to relax its trade restrictions on solar products after the US won a case against the nation.
The WTO Appellate Body has issued a report finding in favor of a US challenge to domestic content requirements introduced by India as part of its National Solar Mission laws in 2011, which require solar power developers to use Indian-manufactured cells and modules.
Since the introduction of these requirements, American solar exports to India have fallen by more than 90 per cent, leading the Obama administration to protest to the WTO that the regulations were discriminatory and violated international trade rules.
The Appellate Body has now affirmed an earlier WTO panel report agreeing with the US view that these requirements discriminated against American-made and other imported solar products, while rejecting all of the arguments India's government put forward in defense of the laws.
Michael Froman, the US trade representative, said: "We strongly support the rapid deployment of solar energy worldwide, including in India. But local content requirements are not only contrary to WTO rules, but actually undermine our efforts to promote clean energy by requiring the use of more expensive and less efficient equipment, making it more difficult for clean energy sources to be cost-competitive."
In total, the US has now brought 23 complaints to the WTO since 2009, which is more than any other WTO member during this period. This reflects a concerted effort by president Barack Obama to step up its policy of active trade enforcement.
The US has been successful in all of the disputes that have been decided by the WTO so far, and is currently seeking action against China for its policy of export restraints on key raw materials.