Challenges Facing India's National Solar Energy Development: The Pitfalls of the National Solar Mission and Alternatives Available

31 Pages Posted: 24 Nov 2015

Date Written: April 21, 2015

Abstract

In this paper, I argue that domestic content requirements should be removed from India’s Jawaharlal Nehru National Solar Mission (National Solar Mission or Mission) because such requirements are inconsistent with India’s multilateral obligations under the World Trade Organization (WTO). Subsidies that are contingent upon the use of domestic instead of foreign products are inconsistent with the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the National Treatment obligation under Article III of the General Agreement on Tariffs and Trade (GATT) and Article 2 of the Agreement on Trade Related Investment Measures (TRIMs Agreement). The Government of India (or India) should seek alternative measures to promote the development of the country’s renewable energy industries.

Governments have recently responded to the impact of climate change and global warming in various ways, from instituting domestic regulatory measures to entering into multilateral agreements with an aim to cut global emissions of greenhouse gases. One of the leading contributors to global warming is the burning of fossil fuels for energy consumption. Fossil fuels not only hurt the environment, they are also non-renewable. Eventually these fuel sources will be depleted. With this in mind, governments have actively attempted to develop renewable energy alternatives that have little to no impact on the environment.

To accomplish these goals, many governments across the globe have implemented subsidy schemes to promote renewable energy development within their countries. Many of these subsidy schemes require renewable energy producers to use a certain amount of local resources and labor in order to qualify for the subsidy schemes. While these programs would have the intended effect of developing renewable energy industries within a country, the programs are susceptible to challenges under the WTO. This paper examines why the domestic content requirements of India’s National Solar Mission are inconsistent with India’s WTO obligations and suggests alternative measures available to India that are not susceptible to challenges at the WTO.

Suggested Citation

Gilmore, Alex, Challenges Facing India's National Solar Energy Development: The Pitfalls of the National Solar Mission and Alternatives Available (April 21, 2015). Available at SSRN: https://ssrn.com/abstract=2693176 or http://dx.doi.org/10.2139/ssrn.2693176

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