The US has lodged a complaint with the World Trade Organization (WTO) against India over its alleged discrimination over American solar products.
The US has argued that India's solar policy is unduly favouring local solar energy producers by asking the US counterparts to use Indian-manufactured solar cells and modules. The country also offers subsidies to local developers for using domestic equipment instead of imports, the US alleged.
The "forced localisation requirements" is restricting India's market to US imports, according to the complaint. The alleged protectionism is making local products cheaper than the imports, violating the trade rules between the countries.
"The United States strongly supports the rapid deployment of solar energy around the world, including with India. Unfortunately, India's discriminatory policies in its national solar program detract from that successful cooperation, raise the cost of clean energy, and undermine progress toward our shared objective," US Trade Representative Ron Kirk said in a statement.
"Trade enforcement is critical for ensuring that our clean energy goods and services can compete on an equal footing around the world. As today's action demonstrates, we will not hesitate to enforce our rights under our trade agreements on behalf of American workers and manufacturers."
Having launched its national solar policy, the Jawaharlal Nehru National Solar Mission, in 2010, Asia's third largest economy has been pushing the use of solar products in the country in line with its growing energy demand.
The policy mandates that all government purchases of solar products should be from local manufacturers, while private solar energy producers can buy cells and modules from anyone.
The US argued that its companies should be given an equal opportunity to compete in the Indian market, where the demand for solar cells and modules is expected to increase significantly going forward.
While the US is looking to expand its trade links with India, one of the emerging economies in South and East Asia, there have previously been trade disputes between the countries.
In 2012, the US has launched a case against India at the WTO, saying the nation's ban on poultry imports is violating global trade rules.
India had banned imports of US farm products, including poultry meat and chicken eggs, in 2007 to prevent the avian flu contagion. The US authorities claimed that the ban was to protect local industry.
Later, India lodged a complaint at the WTO, alleging the import duties levied on Indian steel products by the US are unfair.