The WTO said in a statement that its Dispute Settlement Body (DSB) had agreed during a meeting to set up a panel to review China's assertion that the Indian measures unfairly discriminate against foreign businesses and restrict trade, in violation of WTO rules.

The measures in question include incentives for the production of advanced chemistry cell batteries, automobile and auto components and electric vehicles.

China, which charged that the measures discriminated against the use of goods of Chinese origin, had back in October requested consultations with India to iron out the dispute.

When that did not work, Beijing first asked the WTO last month to establish a panel of experts, but the request was blocked by India.

The DSB granted the second request on Tuesday.

Under WTO regulations, parties in a dispute can block a first request for an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.

India told Tuesday's DSB meeting that it regretted that China had pushed forward with its panel request, insisting it had participated in the earlier consultations in good faith,

It said it remained confident its measures complied with WTO rules.

The United States, a third party in the case, also voiced disappointment that China had chosen to move forward with the panel request.

"China's complaint is a regrettable attempt to distract from its own non-market policies and practices, to entrench reliance on China's non-market excess capacity, and to undermine the broader interests of all WTO Members," the US representative said.