China’s Trade Disputes Against India and WTO Reform
In this brief, the author examines the disputes raised by China at the WTO against India’s Production Linked Incentive (PLI) schemes relating to solar panels, electric vehicles, batteries and IT products, and argues that they highlight deeper shortcomings in the WTO rulebook.
China claims that India’s PLI schemes discriminate against imports by linking incentives to domestic value addition, violating subsidy, investment, and tariff rules. India will likely counter that the schemes are legitimate, are aimed at boosting domestic manufacturing, and are not contingent on exports.
The author draws attention to the inherent irony in China’s WTO complaint, given China’s long-standing, large-scale, and opaque use of industrial subsidies that have helped it dominate sectors like solar panels, electric vehicles, and batteries, while creating enormous overcapacity which distorts global trade. These practices, combined with China’s willingness to use trade leverage for strategic purposes, have raised global concerns about economic security and supply-chain dependence.
The author argues that WTO rules - designed for an era focused on economic efficiency and comparative advantage - are inadequate to address today’s realities, where resilience, diversification, and economic security matter as much as efficiency. Major market economies such as the US, EU, UK, and Japan, have already embraced industrial policies to protect strategic sectors.
This makes it imperative that economic security should become a key element in the ongoing discussions on WTO reform, allowing greater policy space for countries, especially the developing economies, to build domestic capacity, diversify supply chains, and manage over-concentration without excessive WTO constraints.
The author concludes that while such reform presents complex challenges, avoiding the issue risks leaving most WTO members vulnerable in a system that has has been gamed by China and has acquired structural asymmetries.
To read this DPG Policy Brief Vol. XI, Issue 4, please click “China’s Trade Disputes Against India and WTO Reform”.
