China Challenges India’s Solar and IT Policies at WTO

China has initiated a trade dispute against India at the World Trade Organization, escalating economic tensions between the two Asian economies. Beijing has formally sought consultations with New Delhi, alleging that India’s support measures for the solar and information technology sectors violate global trade rules and discriminate against Chinese goods.

Nature of China’s WTO Complaint

According to a WTO communication, China has questioned India’s tariff treatment of certain technology products and policy measures that prioritise domestic goods over imports. Beijing argues that these measures adversely affect Chinese exports, particularly in solar cells, solar modules and IT hardware, where China is a dominant global supplier. Seeking consultations is the first formal step under WTO dispute settlement procedures.

Policies Under Scrutiny

China has raised objections to incentives provided under India’s Production Linked Incentive schemes, especially the National Programme on High Efficiency Solar PV Modules. It claims that eligibility and disbursement of incentives are linked to minimum local value addition requirements, which it views as inconsistent with multilateral trade obligations. India maintains that these policies are aimed at strengthening domestic manufacturing and reducing import dependence.

Legal Basis Cited by China

Beijing has alleged violations of multiple WTO agreements, including the General Agreement on Tariffs and Trade 1994, the Agreement on Subsidies and Countervailing Measures, and the Agreement on Trade-Related Investment Measures. In its request, China stated that India’s measures either directly or indirectly discriminate against goods of Chinese origin in key technology sectors.

Imporatnt Facts for Exams

• WTO consultations are the first stage of dispute settlement.
• PLI schemes aim to boost domestic manufacturing capacity.
• GATT 1994 governs trade in goods among WTO members.
• China is India’s second-largest trading partner.

Trade Context and Possible Next Steps

The dispute comes amid widening trade imbalances. In 2024–25, India’s trade deficit with China expanded sharply as imports rose while exports declined. If consultations fail to resolve the issue, China may request the WTO to establish a dispute panel to adjudicate the matter. The case adds to broader 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.