Previous Year Question
The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to
Developing solar power production in our country
Granting licences to foreign TV channels in our country
Exporting our food products to other countries
Permitting foreign educational institutions to set up their campuses in our country
Correct Answer: A
Detailed Solution
A Domestic Content Requirement—DCR is a condition requiring a specified quantity or proportion of goods or components used in a project to be manufactured domestically, particularly for obtaining government support or participating in a notified programme.
The term was in the news because of requirements relating to the use of Indian-manufactured solar cells and solar modules under the Jawaharlal Nehru National Solar Mission—JNNSM. Therefore, option (a) is correct.
Background of the India–solar energy dispute
During the initial phases of the JNNSM, certain solar power developers were required to purchase specified categories of solar cells and modules manufactured in India.
The policy sought to:
Develop India’s solar manufacturing capacity.
Reduce dependence on imported solar cells and modules.
Promote domestic industry, employment and technological capabilities.
Strengthen the domestic renewable-energy supply chain.
The United States requested consultations with India at the WTO on 6 February 2013. The dispute was titled India—Certain Measures Relating to Solar Cells and Solar Modules, DS456.
The United States argued that the DCR measures, by giving preference to domestic solar cells and modules over imported products, were inconsistent with:
The National Treatment obligation under Article III:4 of GATT 1994; and
Article 2.1 of the TRIMs Agreement.
The WTO Panel and subsequently the Appellate Body upheld the principal US claims concerning the specified JNNSM measures. India’s government-procurement defence was also unsuccessful because the product procured by the government was electricity, while the discriminatory treatment applied to solar cells and modules.
The decision does not mean that every Make in India measure or domestic-manufacturing incentive automatically violates WTO rules. The legal position depends on:
How imported and domestic products are treated.
Whether support is based on production or on compulsory use of domestic inputs.
Whether a valid government-procurement exception applies.
Whether any exception under the relevant WTO Agreement is available.
Therefore, DCR and a Production Linked Incentive—PLI are not identical policy instruments. A DCR mandates the use of domestic inputs, whereas a PLI rewards eligible manufacturers on the basis of specified production and performance.
Current position (2026): India uses several policy instruments, in addition to DCR provisions in specified programmes, to promote domestic solar manufacturing. These include:
The PLI Scheme for High-Efficiency Solar PV Modules.
The Approved List of Models and Manufacturers—ALMM.
Domestic solar-cell and module conditions in specified government schemes.
Basic Customs Duty and other manufacturing-ecosystem support.
The approved financial outlay for the Solar PV Module PLI Scheme is ₹24,000 crore. Selected manufacturers are eligible for performance-linked incentives for up to five years after commissioning.