China urges WTO to set up panel in case against India's support measures for solar, IT sectors

China formally requested the World Trade Organization's Dispute Settlement Body (DSB) to establish a panel to adjudicate its complaint against India's suppor...

What Happened

China formally requested the World Trade Organization's Dispute Settlement Body (DSB) to establish a panel to adjudicate its complaint against India's support measures for solar cells, solar modules, and information technology goods.
This follows a first request for consultations filed in December 2025, after bilateral talks between the two countries failed to produce an agreed resolution.
China alleges that India's measures — particularly the Production Linked Incentive (PLI) scheme for high-efficiency solar PV modules and tariff treatment of IT goods — discriminate against Chinese products by favouring domestic manufacturers.
India declined to accept the panel request, stating that there appeared to be an "inaccurate understanding of the facts" and that it remains committed to upholding WTO rules.
This dispute runs parallel to a separate January 2026 WTO panel request by China concerning India's support measures for the electric vehicle (EV) and battery sectors.

Static Topic Bridges

WTO Dispute Settlement Mechanism

The WTO's Dispute Settlement Understanding (DSU) is the binding rulebook for resolving trade conflicts between member nations. When bilateral consultations fail, the complaining member may request the DSB to establish a three-member investigative panel. The DSB operates on a "reverse consensus" principle, meaning a panel is established unless all members — including the complainant — agree to block it.

The legal basis for dispute settlement lies in Articles XXII and XXIII of GATT 1994.
After a panel is established, the process — including any Appellate Body review — is normally concluded within 12 months.
Once adopted, panel reports create binding obligations, and non-compliance can lead to authorised retaliatory measures.
The WTO's dispute number for this case is DS644.

Connection to this news: China's escalation from consultations to a formal panel request is a standard procedural step under the DSU; India's refusal does not block the panel because of the reverse consensus rule.

Production Linked Incentive (PLI) Scheme

The PLI scheme is India's flagship industrial policy, launched in November 2020 across 13 sectors, to incentivise domestic manufacturing and reduce import dependence. Under the scheme for High Efficiency Solar PV Modules — administered by the Ministry of New and Renewable Energy — manufacturers receive per-unit incentives linked to Local Value Addition (LVA): the higher the domestic content, the higher the payout.

PLI for Solar PV Modules has two tranches. Tranche II (2023) allocated Letters of Award for 39,600 MW of manufacturing capacity to 11 bidders.
The scheme falls under the broader "Atmanirbhar Bharat" (Self-Reliant India) initiative.
Incentives are disbursed over five years post-commissioning of manufacturing facilities.
A similar PLI challenge (DS456) was brought against India's earlier domestic content requirement in solar; India lost that case at the WTO.

Connection to this news: China specifically challenges the LVA requirements embedded in PLI as violating the TRIMS Agreement, which prohibits investment measures that condition benefits on use of domestic over imported inputs.

TRIMS Agreement and SCM Agreement

The Agreement on Trade-Related Investment Measures (TRIMS) prohibits WTO members from imposing investment conditions that are inconsistent with national treatment (Article III) or the general elimination of quantitative restrictions (Article XI) under GATT. The Agreement on Subsidies and Countervailing Measures (SCM) distinguishes between prohibited subsidies (e.g., import substitution subsidies contingent on domestic content) and actionable subsidies that may harm another member's trade interests.

TRIMS Illustrative List specifically bans measures that require use of domestic products over imports (local content requirements).
Under the SCM Agreement, import-substitution subsidies are categorically prohibited (Article 3.1(b)).
Members may still pursue green industrialisation measures but must structure them to avoid explicit domestic-content conditions.

Connection to this news: China's legal argument centres on PLI's LVA conditions constituting a prohibited import-substitution subsidy under SCM Article 3 and a local content requirement banned under TRIMS.

Key Facts & Data

WTO case reference: DS644 (Solar and IT measures), separate from DS651 (EVs and batteries).
China filed the consultation request: December 19, 2025.
First panel request blocked by India: January 2026 (for the EV/battery case).
PLI for Solar PV Modules — total capacity awarded under Tranche II: 39,600 MW to 11 manufacturers.
TRIMS Agreement came into force: January 1, 1995 (with the establishment of the WTO).
India's previous WTO loss on solar domestic content: DS456, decided against India in 2016.
Under DSU Article 12, a panel must complete its work within six months (nine months maximum) from the date of its composition.