In 2013 certain measures adopted by India under the Jawahar Lal Nehru National Solar Mission were challenged by the United States before the World Trade Organization in the India–Solar Cells dispute. One of the measures was the grant of long-term power purchase agreements to solar energy providers, based on domestic content requirements. Though the United States initially challenged this as violating the Agreement on Subsidies and Countervailing Measures, the Panel did not address this clam as it was subsequently withdrawn by the United States. The subsidisation of renewable energy restricts free trade, and potentially conflicts with the obligations of States under the Agreement on Subsidies and Countervailing Measures. This paper seeks to provide a justification for the potential violation of the Agreement on Subsidies and Countervailing Measures using the environmental exceptions provided under Article XX of the General Agreement on Tariffs and Trade, such that the essential balance between trade liberalisation and the right of regulation of States is maintained. For this purpose, the potential implications of the existing renewable energy subsidy policies in terms of conflicts with the Agreement on Subsidies and Countervailing Measures are examined, along with an analysis of the previous cases involving such conflicts. Thereafter, an analysis is done of the covered agreements under the WTO to which the exceptions under Article XX of the General Agreement on Tariffs and Trade are applicable, either directly or indirectly. Drawing from this analysis, it is argued that the exceptions under Article XX of the General Agreement on Tariffs and Trade should be applicable to the Agreement on Subsidies and Countervailing Measures potentially violated by renewable energy subsidies. Finally, the implications for the Indian renewable energy sector are discussed, in the event that the balance between free trade and the right of States to regulate in light of environmental concerns is maintained.