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Indian govt's power purchase agreements with solar firms inconsistent: WTO

25 Feb 2016 Evaluate

India got a setback with the World Trade Organisation (WTO) hearing a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms, has ruled against India saying that the government's power purchase agreements with solar firms were 'inconsistent' with international norms. The WTO’s Dispute Settlement Panel has ruled that “the DCR measures are inconsistent” with relevant provisions of TRIMs (Trade Related Investment Measures) Agreement and with the articles of the erstwhile GATT (General Agreement of Trade and Tariffs). The panel also found that the DCR measures accorded “less favourable treatment” to the American companies and were 'not justified' under the general exceptions in GATT rules.

Though, India can challenge this ruling before the appellate body of the WTO, but the findings of the panel said that DCR measures are not distinguishable in any relevant respect from the domestic content requirements previously examined under this provision by the Appellate Body in Canada Renewable Energy / Feed-In Tariff Programme and the electricity purchased by the government is not in a 'competitive relationship' with the solar cells and modules subject to discrimination under the DCR measures.

The panel asked India to 'bring its measures into conformity with its obligations under the TRIMs Agreement and the GATT 1994', the panel said that 'in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment'.

The dispute relates to the domestic content requirements imposed by India for the National Solar Mission, including in the Guidelines and Request for Selection documents, the model power purchase agreement, and the individually executed power purchase agreements between Indian government agencies and solar power developers. On January 11, 2010, India had launched its national solar policy, named Jawaharlal Nehru National Solar Mission. The country has an ambitious target of generating 20,000 Mega Watts of solar power by 2022.

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