Beijing says consultations with India failed to resolve matter; a panel will be constituted on second request
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India has officially blocked China’s first request for the setting up of a dispute settlement panel at the WTO challenging its tariffs on specific high-tech goods and certain measures within its Solar Module Programme that incentivise local value addition .“At the WTO’s dispute settlement body (DSB) meeting on Friday, Beijing noted that it was not able to reach a mutually satisfactory solution in the consultations with India that were held on the issue and it had to, therefore, request for the panel,” a Geneva-based official said.While India was able to block China’s request for a dispute settlement panel this time, WTO rules specify that a country can’t do so for a second time if the request is repeated by the complainant at a subsequent meeting of the DSB.Custom dutiesBeijing alleges that New Delhi imposes customs duties on about a dozen imported IT products, including smartphones, that exceed the bound rates established in India’s WTO commitments. It says India is supposed to maintain zero tariffs on the identified IT goods. But India maintains that these products do not fall under its zero tariff commitments under the IT Agreement of 1996 as these didn’t exist then.China also claims that India’s Solar Module Programme violates WTO rules by offering cash grants to domestic producers contingent on local value addition requirements. Beijing argues these incentives discriminate against foreign imports and constitute illegal incentives tied to the use of domestic goods.India expressed regret over China’s request for a WTO dispute panel and declined to accept it. It noted that it had engaged in extensive consultations in good faith to reach a mutually satisfactory resolution, expressing surprise that Beijing had failed to genuinely consider the context of the policies, the source said. India strongly maintained that all the measures in question are fully compliant with WTO law.Once the WTO’s Dispute Settlement Body establishes the panel, it will hear arguments from both nations before issuing its final ruling. However, if either country appeals the decision, the case will effectively enter a legal vacuum. Because the WTO Appellate Body currently lacks the required quorum of judges to function — due to a prolonged deadlock over appointments — any appeal will land in a permanent backlog, leaving the dispute unresolved indefinitely.With a dysfunctional Appellate Body, an unfavourable decision by the dispute panel will not lead to any penalties on India if it decides to appeal it. However, it can build pressure on New Delhi to discontinue or tone down the identified measures in bilateral trade discussions.Published on May 22, 2026
