India Pays USA in the Same Coin at WTO on Illegal Solar Subsidies

USA made India remove its domestic content requirements (DCR) a couple of years ago for solar panel projects by moving the WTO as it violated the guidelines of the international trade body. This was a very stupid move by the USA because most of the Indian imports came from China and other countries as hardly any solar manufacturing exists in the USA. This has been proven by the fact that China has captured over 90% of the Indian solar market while USA does not have a 1% presence despite the market being made open with the removal of DCR requirements.

This petty move only benefited China which could be considered a common opponent for both these countries. In a retaliatory move, India had also moved against the USA for providing illegal subsidies for its solar panel manufacturers as many US states had domestic content requirements. Now WTO has come out with a ruling in favor of India. It has found that the USA has violated international trade rules and should remove these subsidies. While India gains a victory, both India and the USA are losers. Even if the USA removes these restrictions, India is hardly going to gain much as the cost competitiveness of Chinese made solar panels is much higher than that of Indian made ones. Even with the anti-dumping duties imposed by the USA on Chinese and Taiwanese imports, the major Chinese solar manufacturers are dominant in the USA market as they are using Vietnamese and Thai factories to circumvent the ADD and safeguard duties.

The USA has anyway become much stringent in trade matters after the election of Donald Trump. Like other countries, the trade relationship between USA and India has become quite strained with a number of tit and tat duties being imposed on each other’s exports by the countries. India has mostly been restrained as the USA has made it highly difficult for India to export services as well as metals where it has a cost advantage over the local USA made products. India too has imposed duties on USA imports of agricultural products like almonds which have a well-established market in India. Fighting in WTO anyway does not make much sense as the USA has more or less started ignoring WTO, by using national security clause on flimsy grounds, to impose duties on countries at its own will.