WTO sets up dispute panel on China’s complaint against India’s PLI schemes
The panel was created after both countries, which are members of the WTO, failed to resolve their disagreement through standard bilateral consultations. The dispute centres on allegations by Beijing that India's Production Linked Incentive schemes and certain policy measures discriminate against Chinese goods, leading to potential violations of global trade rules.
- Feb 24, 2026,
- Updated Feb 24, 2026 10:52 PM IST
The World Trade Organisation (WTO) has established a dispute panel to assess China's complaint concerning India's policies in the automotive and renewable energy sectors. The panel was created after both countries, which are members of the WTO, failed to resolve their disagreement through standard bilateral consultations. The dispute centres on allegations by Beijing that India's Production Linked Incentive schemes and certain policy measures discriminate against Chinese goods, leading to potential violations of global trade rules. This development signals an escalation in trade tensions between the two economic partners, whose commercial relationship has been marked by a growing deficit for India.
Seeking consultation is the first step of the dispute settlement process as outlined in WTO rules. Consultations were held on November 25, 2025, and January 6, 2026, aimed at reaching a mutually agreed solution between the parties. As these efforts did not resolve the issues, China submitted a second request for the formation of a panel to adjudicate the matter. The Geneva-based official confirmed, "At the second request of China, the Dispute Settlement Body (of the WTO) agreed at its meeting to establish a panel to examine certain Indian measures in the automotive and renewable energy sectors."
The core of Beijing's complaint involves India's use of Production Linked Incentive (PLI) schemes, especially those related to advanced chemistry cell batteries and policies fostering electric vehicle manufacturing. China alleges that specific requirements within these initiatives create disadvantageous conditions for Chinese exporters, thereby breaching WTO trade obligations. The dispute underscores the complexity of balancing industrial policy with international trade commitments, particularly as nations seek to expand domestic manufacturing capabilities.
India and China maintain extensive trade relations, with China ranking as India's second-largest trading partner. Despite this, the trade balance remains heavily skewed. During the last fiscal year, India's exports to China fell by 14.5 per cent, reaching USD 14.25 billion in 2024-25 compared to USD 16.66 billion in 2023-24. In contrast, Indian imports from China increased by 11.52 per cent, totalling USD 113.45 billion in the same period, up from USD 101.73 billion the previous year.
The widening trade deficit has become a point of concern for Indian policymakers, as the gap expanded to USD 99.2 billion in 2024-25. Officials and industry analysts argue that addressing the dispute at the WTO could influence the future trajectory of bilateral trade policy and the strategic sectors involved. While the establishment of the panel represents a procedural step within the WTO's framework, its outcomes could have broader ramifications for both countries' economic strategies.
Under WTO dispute settlement procedures, the formation of a panel follows unsuccessful consultations and is a formal process to evaluate the claims and defences provided by the parties involved. Both India and China have invoked their rights under this mechanism, highlighting the significance of transparent and rules-based adjudication in international trade. The panel's findings will be closely monitored by stakeholders in the automotive and renewable energy sectors, as well as by governments and businesses affected by the evolving trade environment.
(with PTI inputs)
The World Trade Organisation (WTO) has established a dispute panel to assess China's complaint concerning India's policies in the automotive and renewable energy sectors. The panel was created after both countries, which are members of the WTO, failed to resolve their disagreement through standard bilateral consultations. The dispute centres on allegations by Beijing that India's Production Linked Incentive schemes and certain policy measures discriminate against Chinese goods, leading to potential violations of global trade rules. This development signals an escalation in trade tensions between the two economic partners, whose commercial relationship has been marked by a growing deficit for India.
Seeking consultation is the first step of the dispute settlement process as outlined in WTO rules. Consultations were held on November 25, 2025, and January 6, 2026, aimed at reaching a mutually agreed solution between the parties. As these efforts did not resolve the issues, China submitted a second request for the formation of a panel to adjudicate the matter. The Geneva-based official confirmed, "At the second request of China, the Dispute Settlement Body (of the WTO) agreed at its meeting to establish a panel to examine certain Indian measures in the automotive and renewable energy sectors."
The core of Beijing's complaint involves India's use of Production Linked Incentive (PLI) schemes, especially those related to advanced chemistry cell batteries and policies fostering electric vehicle manufacturing. China alleges that specific requirements within these initiatives create disadvantageous conditions for Chinese exporters, thereby breaching WTO trade obligations. The dispute underscores the complexity of balancing industrial policy with international trade commitments, particularly as nations seek to expand domestic manufacturing capabilities.
India and China maintain extensive trade relations, with China ranking as India's second-largest trading partner. Despite this, the trade balance remains heavily skewed. During the last fiscal year, India's exports to China fell by 14.5 per cent, reaching USD 14.25 billion in 2024-25 compared to USD 16.66 billion in 2023-24. In contrast, Indian imports from China increased by 11.52 per cent, totalling USD 113.45 billion in the same period, up from USD 101.73 billion the previous year.
The widening trade deficit has become a point of concern for Indian policymakers, as the gap expanded to USD 99.2 billion in 2024-25. Officials and industry analysts argue that addressing the dispute at the WTO could influence the future trajectory of bilateral trade policy and the strategic sectors involved. While the establishment of the panel represents a procedural step within the WTO's framework, its outcomes could have broader ramifications for both countries' economic strategies.
Under WTO dispute settlement procedures, the formation of a panel follows unsuccessful consultations and is a formal process to evaluate the claims and defences provided by the parties involved. Both India and China have invoked their rights under this mechanism, highlighting the significance of transparent and rules-based adjudication in international trade. The panel's findings will be closely monitored by stakeholders in the automotive and renewable energy sectors, as well as by governments and businesses affected by the evolving trade environment.
(with PTI inputs)