U.S. to take action against India over solar subsidies -India govt source

by Reuters
Monday, 10 February 2014 18:51 GMT

By Frank Jack Daniel

NEW DELHI, Feb 10 (Reuters) - The United States plans to take India to the World Trade Organisation over the subsidies it gives to its solar power industry, an Indian government source said on Monday, a step that could further strain relations between the countries.

There was no immediate comment from U.S. Trade Representative Michael Froman, who was due to make a trade enforcement announcement linked to India at 2 p.m. (1900 GMT) on Monday. The Indian official said Washington had already informed New Delhi of the planned action.

The United States filed a challenge with the WTO last February over elements of India's national solar program, which it said discriminates against foreign solar products.

It was not immediately clear how Monday's scheduled announcement relates to that action.

The U.S. trade office said last February that India's solar program appears to discriminate against the use of U.S. solar equipment by requiring solar energy producers to use Indian-manufactured solar cells and modules and by offering subsidies to those developers for using domestic equipment instead of imports.

India hit back at the U.S. accusations in April, asking Washington to justify its own incentives offered to U.S. companies that use local labour and products in renewable energy and water projects.

The trade spat between the two allies follows the recent arrest and strip search of a female Indian diplomat in New York in connection with visa fraud charges.

The arrest sparked fury in India, prompted retaliatory measures against U.S. diplomats there and plunged U.S.-India relations to their lowest point since India tested a nuclear device in 1998.

India is widely perceived by lawmakers and business groups in Washington as a serial trade offender, with U.S. companies unhappy about imports of everything from shrimp to steel pipes they say threaten U.S. jobs.

There are 14 past or current World Trade Organization cases between India and the U.S., whose bilateral trade measures about $63.7 billion a year.

Washington slapped duties on U.S. imports of some solar energy products from China in 2012 after finding companies were "dumping" the products in the U.S. market at low prices.

U.S. trade officials are considering whether to expand those duties after complaints that Chinese manufacturers have sidestepped the duties by shifting production to Taiwan. A preliminary decision by the U.S. International Trade Commission regarding the Chinese products is due on Friday.


An Indian trade ministry official accused the United States of using the planned WTO action as a "pressure tactic".

"As the U.S. is a big economy, they think they can arm-twist India to get concessions for entering into (India's) expanding market, in manufacturing and retail," the official said.

India has argued its solar policies are legal under WTO government procurement rules that permit countries to exempt projects from non-discrimination obligations.

Asia's third-largest economy suffers chronic electricity shortages and hopes solar power will help to ease the strain on its creaking national grid. Around 40 percent of India's 1.2 billion population lack access to power, according to one government estimate.

U.S. environmental groups have urged the Obama administration to back off any WTO action, arguing that building up India's solar power industry will help it cut high greenhouse gas emissions.

But the Obama administration has come under growing pressure from lawmakers and business groups to take a tougher stance on perceived Indian protectionist measures and intellectual property rights abuses by Indian drug companies.

Head of the U.S. Food and Drug Administration Margaret Hamburg was in Delhi on Monday, in the first high-level U.S. visit to India since the row over the arrest of the Indian diplomat.

India's trade minister Anand Sharma said he talked to Hamburg about drug registration and quality, following a string of sanctions against Indian drugmaker Ranbaxy Laboratories Ltd .

Another source said India complained to Hamburg that sanctions were imposed on Indian pharmaceutical companies before the companies were given the opportunity to make their case. Issues regarding access of Indian fruit and rice to the U.S. market were also discussed, the source said.

India is the biggest overseas source of medicines to the United States and is home to over 150 FDA-approved plants, including facilities run by global players. Pharmaceutical exports from India to the United States rose nearly 32 percent last year to $4.23 billion.

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