China claims India is breaching the Global Agreement on Tariffs and Trade (GATT) by charging 20% tariffs and an extra 7.5% charge (Agriculture Infrastructure and Development Cess – AIDC) on solar photovoltaic (PV) cells – 20% if they are made up into modules or panels.

It also complains that India’s Solar Module Programme pays Indian solar power technology producers unfair subsidies, based on certain technical requirements and minimum amounts of domestic added value in sourcing and production. This also breaches GATT, claims Beijing, as well as the WTO’s Trade Related Investment Measures (TRIM) Agreement and Subsidies and Countervailing Measures (SCM) Agreement.

Speaking at the May WTO Dispute Settlement Body (DSB) meeting, China said member states should avoid ‘restrictive and discriminatory measures that disturb competitive opportunities, disrupt supply chains, increase uncertainties for businesses and operators, and negatively affect the healthy development of global renewable energy and technology sectors’. Its government argued it had tried to resolve the dispute since consultations in December 2025 but failed. Indian diplomats responded that it was ‘strange that, despite the importance of a responsible and diversified supply chain, a country that is estimated to control more than 80% of the global value chain for solar module production feels it necessary to take actions to stymie the legitimate growth of this industry in other countries’, according to a WTO note.

If China brings the case back to a subsequent DSB meeting, it can insist that an arbitration panel rules on the dispute under WTO rules. And while any appeal by India may not be heard because the US government has been refusing to appoint members of the WTO appellate body (who must be approved by consensus), India will not want a negative judgement.

Indian solar struggles
At stake are China’s huge solar panel exports to India that fell from receipts of $2.85bn in the financial year ending March 2024 to $510mn in the year ending March 2026, according to Indian Commerce Ministry data, representing a decline in quantity sales from 36 million in 2023/2024 to 27 million in 2025/2026. This fall in imports, and the role of the central government in prompting them, has been welcomed by the Indian solar power industry, which has supported New Delhi’s policies.

‘We feel that these [policies] are WTO compliant,’ says Ravi Verma, Governing Council Member of Sustainable Projects Developers Association, in New Delhi. ‘What we are manufacturing is mostly consumed within India itself so there is no violation of WTO rules,’ he adds.

Indeed, India’s central government has given subsidies to some solar power development projects: for instance, in April 2023, it allocated INR139bn ($1.49bn) under a ‘Production Linked Incentive Scheme for High Efficiency Solar PV Modules’, to be distributed to the manufacturers of solar components over a period of five years. The Solar Energy Corporation of India (SECI), the implementing government agency, said that its objective is promoting domestic manufacture of high-efficiency solar PV modules in India and thus ‘reduce import dependence... in renewable energy’.

Furthermore, according to Jaideep Malaviya, a Maharashtra-based solar energy consultant and an ex-board director of the International Solar Energy Society, the cost of manufacturing PV modules in India is competitive to China. He adds: ‘With mass production, even wafer-thin profit margins should be able to sustain the industries.’

He points out that the Chinese government is giving out a lot of export incentives, and asks rhetorically, why shouldn’t the same be extended by the Indian government?

Malaviya stresses the current imbalance in solar energy equipment trades. According to International Energy Agency (IEA) data, in 2023 China produced 98% of solar wafers, 92% of cells and 85% of panels globally.

The world needs some more alternatives, according to Verma: ‘For a fair global trade and cheaper supplies, other geographies should also be manufacturing,’ he says.

The Indian government certainly agrees. Since 2019, an order from the Ministry of New and Renewable Energy (MNRE) stipulates that all the government-funded or assisted solar power generation projects must source their panels and cells from the India-based manufacturers included in its Approved List of Models and Manufacturers (ALMM). Furthermore, according to a MNRE directive released in March, domestic sourcing of government-funded projects will become mandatory from June 2028 even for solar power-focused silicon ingots and wafers.

Since ALMM was introduced, India’s domestic solar module manufacturing capacity has grown from 8.2GW in 2021 to 74GW in 2025 and then to 172GW in March 2026, according to Indian government data. At the same time, the import of solar modules decreased from $2.15bn in the financial year ending March 2025 to $758mn in the following financial year, according to an April 2026 communiqué from India’s Press Information Bureau (PIB).

Furthermore, Verma hopes that India’s current domestic solar module manufacturing capacity of 40GW will reach 60–70GW in the next six months. For these modules, 95% of the silicon wafers and 50–60% of cells are currently imported, he says.

Meanwhile, Indian solar power demand remains high, with installed capacity at end March 2026 being 150.26GW, of which 16.3GW was installed during the previous year, says the PIB. The shortage of domestically manufactured solar cells is seriously affecting the development of new solar power projects in the country, comments Vijay Kumar, President of the Solar Ardent Association, in Haryana, an Indian pro-solar lobbying group.

‘Most of our ongoing [solar power] projects that have DCR [domestic content requirement] have been put on hold,’ says Kumar, also Managing Director of Indivm Energy, an engineering, procurement and construction solar energy company. He adds ‘We are not able to work as we are not able to get the DCR panels.’

China saves solar capacity for later
While the Chinese government is pressing forward with its WTO case, its position is being lent credibility by China’s own efforts to cut state support to its huge solar equipment sector. In April, Beijing axed a 9% VAT rebate on solar PV components and reduced the 9% export VAT export rebate on battery products to 6%. This is part of an effort to reduce Chinese solar production overcapacity, but not by too much, because Beijing retains major solar expansion ambitions.

China sees India as taking advantage of current Chinese overcapacity to build its own solar sector. Beijing wants to keep this production and expertise based at home, for anticipated future solar energy installation booms. So says an unnamed Chinese solar energy consultant in Beijing who helps foreign clients source PV equipment and batteries for installers in Europe and Central Asia.

Speaking on condition of anonymity, the consultant says that China aims to maintain domestic access to China-made solar panels when key Chinese companies are losing money due to ferocious internal competition. The government wants companies to stay strong until it completes a planned build-out of the national grid to accommodate more panels.

For the time being, China’s solar panel production capacity remains at 500GW/y, according to India-based aluminium information service AL Circle. AI Circle notes that this exceeded global demand of 270GW in 2024, causing ‘a sharp decline in prices [so] in many cases, solar panels are being sold below their production cost.’

India’s solar module production capacity build out has been facilitated by Chinese providers. Maiwei Technology and Jiejia Weichuang provide complete production line equipment to India, notes Guancha, a respected Chinese policy-focused news service. Guancha also notes that India has a strategy of ‘fencing off’ the domestic solar market while inviting capital in.

Given India still relies on Chinese technology, engineers and certain inputs for its solar module industry, its dependence may give China leverage in any talks to end the dispute, according to solar power specialists in Beijing. India is also reliant on Chinese suppliers to build out its battery capacity to match the PV boom. Chinese suppliers like Guoxuan High-Tech have already established a presence in India, and more companies are negotiating to enter the huge Indian market.

While this is good news for the Chinese companies concerned, competition from Chinese-built PV production centres in India may hit Chinese solar module exporters who lost money in 2025 through domestic overcapacity, with key firms Tongwei losing nearly CNY10bn ($1.4bn) while TCL Zhonghuan lost CNY9.6bn.

And while Chinese exports of solar panels have continued to thrive, notably in developing countries seeking to expand solar power, lower prices have prevailed – hitting profits. Tongwei sold 43.25GW of modules in 2025, of which 9.52GW were exported, a year-on-year increase of 164% despite the company losing money.

Total sales in the Middle East and Africa were projected to grow by 370% year-on-year, while sales in the Asia-Pacific market increased by 279% year-on-year and in Europe by 129% year-on-year.

India is a significant market within this mix. Over the past decade, its total installed solar PV capacity has surged from 2.82GW in March 2014 to over 150GW in March 2026, according to Guancha, making it one of the world’s top four installers of solar power after China, the US and the European Union.

In 2025, global demand for solar panels totalled 600GW, but there was reportedly manufacturing capacity for 1,100GW.

The question for China is whether this capacity can wait until the government’s planned stimulation of the domestic market kicks in and reduces China’s need for export markets. On 25 June, China’s National Development and Reform Commission and the National Energy Administration announced a plan to build a new energy infrastructure system, under which, by 2030, wind and solar power installations will account for over 50% of China’s total installed energy capacity.

That plan is underpinned by China’s state grid pledge of a 40% increase in capital expenditure over the next five years to absorb more solar power. This effort to plug the transmission gap between China’s less populous but sunny western regions and its energy-hungry east is ‘real and material’ in terms of absorbing renewable energy equipment like solar panels, according to Alicia Herrero, Chief Economist for the Asia-Pacific region at France-based investment bank Natixis.

These energy policy pressures make it unlikely that China (or India) will back down at the WTO, which under the current US-promoted dysfunction within its disputes settlement system, is likely to deliver a stalemate that may harm relations between the two Asian giants.

• Further reading: ‘Longi leads global solar rankings, but trade barriers boost rival manufacturers’. Chinese manufacturers retain dominance in global solar production, but trade barriers are boosting competitors in key markets, according to market analyst Wood Mackenzie.
• ‘Delivering the energy transition in India: the supply side’. After remarkable growth of renewable energy capacity addition, India achieved 50% clean power capacity five years ahead of its National Determined Contributions target, according to the Ministry of New and Renewable Energy. Now, the focus is shifting towards the requirements for green energy delivery mechanisms in India’s coal-dominated grid.