US environmental groups are pressing President Barack Obama's administration to back off a World Trade Organisation case against India they say threatens the ability of the world's second most populous country to cut greenhouse gas emissions.
"We're really worried about this proliferation of trade cases on renewable energy," Ilana Solomon, trade representative for the Sierra Club, said in an interview.
"With the climate crisis upon us, governments should have every tool at their disposal to incentivize renewable energy" and cut use of fossil fuels, Solomon said.
The US Trade Representative's office in early February asked India for WTO consultations on its national solar program, the Jawaharal Nehru National Solar Mission.
That programme, launched in 2010, appears to discriminate against US 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, the USTR said.
That violates a core WTO principle that requires countries to treat foreign goods and services the same way they treat domestic goods and services, U.S. trade officials have said.
With the formal 60-day consultation period ending on Sunday and no sign of a deal, USTR could soon ask for a WTO dispute settlement panel to hear its complaint.
Andrea Mead, a spokeswoman for the USTR, declined to comment on the trade office's next step, but said there were better ways for India to support its solar energy sector.
"Countries have a wide range of policy tools available to promote increased reliance on clean energy that are far more effective than local content rules, and that do not unfairly discriminate against U.S. workers and businesses," she said.
The Sierra Club, Greenpeace US and 10 other environmental groups sent a letter in March to acting US Trade Representative Demetrios Marantis expressing "deep concern" about the case.
"We urge the United States to agree to a solution that allows India to support and build its domestic solar industry, just as we do at home," the groups said.
India has argued that its solar policy measures are legal under WTO government procurement rules that permit countries to exempt projects from non-discrimination obligations.
But cases challenging local content rules have received a boost since the WTO ruled against Canada's requirements for a green energy plan in Ontario province. Canada has appealed that case, brought by Japan and the EU.
"There's a problem with the existing WTO rules from our perspective," Solomon said.
"It is very difficult to design a program with domestic content rules at this point, despite the fact that domestic content rules have been used by industrial countries throughout history to develop new emerging industries," she said.