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Why India's Trade Policies Hurt the U.S. Solar Industry and Jobs

Originally posted in Renewable Energy World.

Today, I testified before the House Subcommittee on Commerce, Manufacturing & Trade on behalf of the American workers and businesses in the U.S. solar industry about India’s restrictive and unfair trade practices.

India is a country with some of the best solar resources in the world.  With the cost of solar continuing to decline, India’s solar sector is poised for explosive growth.  The U.S. is ready to lend our expertise and work to foster positive and lasting trade relations with India in the solar sector.  However, India’s growing use of a certain industrial policy discriminates against U.S. solar exports and provides an unfair competitive advantage to India’s domestic solar manufacturers.

In the past few years, U.S. solar panel manufacturers have contracted to supply hundreds of millions of dollars of exports to India.  Most of these are panels based on “thin film” technology, a leading-edge U.S. technology with a global competitive advantage.

At the same time, India’s solar policies have increasingly turned inward.  In 2010, India adopted a local content requirement as part of the country’s National Solar Mission.  

SEIA wholeheartedly agrees with promoting solar manufacturing, both as an economic development tool and a solution to climate change.  However, India’s government support measures must be consistent with the country’s international trade obligations, and India’s solar local content requirement is a direct violation of those obligations.

While local content requirements may provide some protection for domestic manufacturers, they also stifle innovation, limit a country’s access to new technologies, and increase costs - not to mention the fact that local content requirements are explicitly prohibited by global trade rules.

SEIA supports the overall objectives of India’s National Solar Mission and its focus on growing a domestic solar manufacturing base.  In fact, the U.S. government’s recent initiation of a World Trade Organization (WTO) dispute settlement case challenges only one provision of the National Solar Mission – its local content requirement.  

The U.S. challenge does not threaten the National Solar Mission itself.  Not all government-support measures violate global trade rules and there are a variety of measures India could adopt as alternatives to the local content requirement.  However, there is no list, whether formal or informal, of WTO-consistent government-support programs which countries could turn to for guidance.

Today, industry and governments have an important opportunity to work together and proactively develop such a list with the shared objective of expanding solar energy around the world free from the restraints of unfair trade barriers.  We believe that collaboration – not litigation – will best serve everyone’s interests.

John Smirnow, SEIA Vice President of Trade and Competitiveness

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