China has initiated dispute consultations with India at the World Trade Organization (WTO) concerning tariffs on information and communication technology (ICT) products and subsidies within the solar photovoltaic (PV) sector. The request for consultations was submitted to the WTO on December 19, 2025. China claims that India's measures contravene WTO obligations, including binding tariffs and national treatment, and constitute import substitution subsidies.
The specific measures challenged by China include India's Production Linked Incentive (PLI) scheme for solar PV modules, duties on smartphones, semiconductors, and related machinery. China argues these measures discriminate against Chinese products. The PLI scheme provides incentives based on the extent of local value addition (LVA) in the production of solar modules, with higher LVA leading to greater incentives. China alleges this শর্তs domestic goods over imported ones, violating WTO rules.
China's Ministry of Commerce stated that India's policies give domestic industries an unfair competitive advantage while harming Chinese interests. They are urging India to adhere to its WTO commitments and rectify the contested practices. This is the second complaint China has lodged against India at the WTO in recent months, following an October 2025 objection regarding subsidies for electric vehicles and battery production.
The WTO's dispute settlement mechanism begins with a request for consultation, allowing both parties to seek an amicable resolution within 60 days. If consultations fail, the complaining country may request a panel to investigate the complaint. The panel's recommendations are then presented to the Dispute Settlement Body (DSB).
The core of China's argument against India's PLI scheme for PV solar modules is that the measures favor domestic products over imported goods, specifically those originating from China. China contends that the PLI scheme violates the General Agreement on Tariffs and Trade (GATT), the Trade-Related Investment Measures Agreement (TRIMS), and the Agreement on Subsidies and Countervailing Measures (SCM). Specifically, they allege that India is providing less favorable treatment to imported goods, using investment policies that favor domestic producers, and offering prohibited import substitution subsidies.
India launched the PLI scheme in 2020 to boost domestic manufacturing by providing financial incentives based on incremental sales to strategic industries. The scheme aims to enhance India's position in global value chains and integrate small and medium-scale industries into the production process. While WTO rules permit subsidies, they should not unfairly impact international trade by distorting competition. India defends the PLI scheme as essential for reducing imports and promoting self-reliance. India asserts its industrial policy within WTO norms, emphasizing that the PLI scheme does not include export obligations and that incentives are tied to domestic production and sales.
