China Initiates WTO Dispute Against India Over Solar and IT Sector Policies

China–India Trade Dispute at the WTO

China has initiated a formal trade dispute against India at the World Trade Organization (WTO) , escalating economic tensions between the two Asian economies. Beijing has sought consultations with New Delhi , alleging that India’s policy measures supporting the solar and information technology sectors violate global trade rules and unfairly discriminate against Chinese products.

Nature of the WTO Complaint

According to a WTO communication, China has challenged India’s tariff treatment of certain technology products and policy frameworks that prioritise domestically manufactured goods over imports. Beijing claims that these measures negatively impact Chinese exports, particularly in solar cells, solar modules and IT hardware , sectors where China holds a dominant global position. Seeking consultations marks the first formal step in the WTO’s dispute settlement process.

Policies Under Examination

China has specifically objected to incentives granted under India’s Production Linked Incentive (PLI) schemes , especially the National Programme on High Efficiency Solar PV Modules . It argues that eligibility and incentive disbursement are tied to minimum local value addition requirements , which it views as inconsistent with WTO obligations. India, however, maintains that such measures are essential for strengthening domestic manufacturing , enhancing supply-chain resilience and reducing import dependence in strategic sectors.

Legal Grounds Cited by China

In its request for consultations, China has alleged violations of several WTO agreements, including the General Agreement on Tariffs and Trade (GATT) 1994 , the Agreement on Subsidies and Countervailing Measures (SCM) and the Agreement on Trade-Related Investment Measures (TRIMs) . Beijing contends that India’s measures directly or indirectly discriminate against goods of Chinese origin.

Trade Context and Implications

The dispute arises amid a widening trade imbalance between the two countries. In 2024–25 , India’s trade deficit with China increased sharply as imports grew while exports declined. If consultations fail, China may seek the establishment of a WTO dispute panel . The case adds to global debates on industrial policy, localisation incentives and the balance between free trade commitments and domestic manufacturing goals , with potential implications for India’s solar and technology sectors.

Important Facts for Exams

• WTO consultations are the first stage of dispute settlement

• PLI schemes aim to boost domestic manufacturing

• GATT 1994 governs trade in goods among WTO members

• China is India’s second-largest trading partner