When India ousted a foreign governing body and claimed sovereign independence after nearly a century of colonial status, it may have hoped western economic and political intervention had come to an end. Well today it seems that with the increasing push for globalised trade coupled with new, overarching international governance, the US has been able to, through the World Trade Organisation(WTO), exact measures to manipulate Indian domestic and international trade policy, most recently in the area of solar power.
Since 2010, India, despite contending with crippling poverty, opted to leapfrog traditional fuel sources in an attempt to provide electricity to the thousands currently living without it. By doing this it was able to grow its domestic economy, create jobs while simultaneously moving towards meeting international clean energy targets. The Jawaharlal Nehru National Solar Mission was the first of many planned Indian renewable energy projects.
On a larger scale India is hoping to be able to create a 100MW of power through renewable sources by 2022. A lofty goal, which would make India a front runner and global leader in solar and renewable energy. The Jawaharlal Nehru plant, upon construction, would be capable of producing 20,000 MW of grid connected power. But the real benefit of this project was paving the way for the future of the Indian domestic renewable sector. The Indian Ministry of New and Renewable Energy stated that the project's aim was to reduce solar costs through:
*(i) long term policy; *(ii) large scale deployment goals; *(iii) aggressive R&D; and *(iv) domestic production of critical raw materials, components and products.
Considering that as of now 300 million of India’s billion plus population is without power, work and most likely all the amenities we see as the norm, if not crucial to modern living, these policies would have a long lasting and widespread positive impact on both the economy and the people. On top of that, due to India’s heavy reliance on cheap traditional power production there were 1.3 million premature deaths due to pollution. So beyond lifting India out of poverty, projects like these could actually save the lives of the Indian people.
Unfortunately, all that has come to a halt, 10% of the raw materials and products for this project should come from the domestic Indian private sector. This happened to upset US corporate profit, so the US National Solar Mission reported to the World Trade Organisation in an attempt to either have the policy altered or the plan cancelled. The WTO, an international body with the power to overrule the trade policy of sovereign states, who many consider to be in Uncle Sam’s back pocket, ruled in favour of the US.
For a second let’s play the devil’s advocate, and try to validate the US position beyond mere profit maximisation, corporate espionage and a clear example of a not so new but increasingly transparent form of economic colonialism. To begin with, this isn’t the first time that one country has used the WTO to alter the policies of another nation state. In 2014, Japan filed a complaint about Ontario’s (Canada) 50% domestic content policy. In this case the country issuing the report was also victorious. So while a US/Indian economic disagreement seems to tug at our ancestral guilt as it is representative of historical western interference, countries around the world regularly take advantage of the WTO to rule against protectionist policies.
From a commercial point of view, the idea is that consumers do not regularly discriminate between foreign or domestic products unless there is a significant price difference. However, this seems to fly in the face of the conservative American ideology that American products are of higher quality whilst also supporting domestic economic growth.
Beyond economic and business related arguments, there is also debate over whether domestic protectionist policy hinders the implementation of renewable and green technology. Competition is seen as a driver of affordability, quality and by providing those technologies are eventually affected by economies of scale allowing for mass production and mass implementation. However, until recently economics has been evaluated, for the most, on a national scale where one company outdoes another and therefore enjoys the majority market share. Now, we are witnessing those same manoeuvres on a global scale, in which inter-national industries go head to head. Obviously, the United States is far more developed than India and is also the seen as the most capitalistic and profit driven country on earth. So while India is becoming a leader in almost impossibly cheap consumer tech, when it comes to the construction and planning of large scale projects in an emerging market, India might struggle competing with multinational corporate giants. Don’t forget that just because a company is at its core an American venture that does not mean it won't take advantage of India's cheap labour. So the argument is that American business will better serve India’s renewable energy goals and better serve the people by providing the same products at a lower expense.
However, this is not simply a matter of arbitration and cost cutting. America is effectively stamping out India’s domestic renewable industry before it has a chance to really blossom, all in the name of fair and free trade. The most surprising thing is that India really wasn’t pushing for an all Indian project, but was merely stipulating that 10% be assigned to domestic owned manufacturing. They are not asking for a majority share, but simply making sure that while they allow for foreign participation and fair trade, they are also able to stabilise and support the growth of their own domestic market. Ilana Solomon who is the director of the Sierra Club's Responsible Trade Program stated that:
“By no means has India closed its market to foreign competition...This is about a country's ability to strike a balance between importing and growing a domestic manufacturing industry."
India is not using protectionist policy to pre-emptively gain the majority share of the Solar Mission project but rather aid in creating jobs for Indian people and Indian companies. The most devastating effect of this ruling has been the actual cancellation of the Solar Mission altogether. However, not all hope is lost as India has stated it will appeal the ruling and reinstate the project if it is allowed to implement the 10% domestic content policy. It is a scary time for Sovereign states as more and more control is given to external governing bodies. However we hope to see such organisations used to foster fair trade and not become tools for wealthier nations to take advantage of developing states.