India’s appeal against a WTO panel’s ruling in favour of the US has been dismissed, a development that will force New Delhi to remove provisions that mandated domestic sourcing of solar components for its national solar programme.

The decision of the World Trade Organization’s Appellate Body in favour of the US, which had raised the issue of compulsory sourcing of solar panels and modules for power producers under the Jawaharlal Nehru National Solar Mission (JNNSM), will deal a blow to India’s fledgling domestic industry which includes companies such as MoserBaer and IndoSolar Ltd. Although the JNNSM mandates that just a small fraction (about 8,000 MW of a total of 1,00,000 MW) be created with domestic modules and cells, it meant an assured minimum market for their products.

“The next step will be for India and the US to sit together to agree on a reasonable period of time for implementation of the ruling. India will try to get the US to agree to a period of at least 15 months, but the negotiations will be tough,” a government official told BusinessLine .

The WTO allows a maximum of 15 months for implementation of verdicts and up to 18 months in case of ‘exceptional circumstances’.

The Appellate Body, in its ruling on Thursday, agreed with dispute panel’s finding that the domestic content requirements are inconsistent with the national treatment obligations under WTO rules.

It also agreed with the panel’s findings that that the measures are not covered by the government procurement exemption, because the product being procured (electricity) was not in a “competitive relationship” with the product discriminated against (solar cells and modules).

India had argued at the WTO that since the power generated under JNNSM was bought by an agency of the public sector company NTPC, the transaction qualified as government procurement which was not covered by WTO rules.

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