Domestic Content Requirements Current Affairs

WTO to set up compliance panel in solar dispute case between India, US

The dispute settlement body (DSB) of World Trade Organization (WTO) has decided to set up panel to examine whether India has complied with its 2016 ruling in case against US regarding domestic content requirements (DCR) rules for solar cells and modules.


In 2016, the multilateral body had ruled against India for favouring local manufacturers in its solar power programme, on petition filed by US. But after ruling, US had alleged that India continues to apply WTO-inconsistent measures and had approached WTO demanding action against India for non-compliance of WTO ruling in December 2017. India, however, has maintained that it has complied with WTO’s ruling and had requested WTO to set up a panel to determine its compliance with rulings of dispute.

What is the issue?

In 2013, US had filed complaint before WTO, arguing that domestic content requirement imposed under India’s ambitious Jawaharlal Nehru National Solar Mission (NSM) violates global trading rules by unfavourably discriminating against imported solar cells and modules. In February 2016, WTO panel had ruled that India had violated its national treatment obligation, by imposing the domestic content requirement. US had claimed that its solar exports to India have fallen by more than 90% since India had brought in the DCR rules.

Dispute Settlement Body (DSB)

WTO is an intergovernmental organization that regulates international trade. General Council of WTO convenes as DSB to deal with disputes between WTO members. Such disputes may arise with respect to any agreement contained in Final Act of Uruguay Round that is subject to Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

The DSB has authority to establish dispute settlement panels, refer matters to arbitration, adopt panel, Appellate Body and arbitration reports, and maintain surveillance over implementation of recommendations and rulings. It can also authorize suspension of concessions in event of non-compliance with those recommendations and rulings.