Abstract: The renewed prominence of industrial policy in the context of digital transformation, climate transition, and rising geoeconomic competition has revived debates on the role of state intervention within multilateral trade rules. The paper analyses recent WTO reform proposals, particularly those related to subsidy rules under the Agreement on Subsidies and Countervailing Measures (ASCM), several of which have been promoted by advanced economies including the United States and the European Union. These proposals emphasise concerns over market distortions, non-market practices, and global overcapacity. Developing countries, however, interpret these reforms in light of enduring structural inequalities in income levels, technological capabilities, and participation in global value chains. Drawing on evidence on the deployment of industrial policy, innovation concentration, and production hierarchies, the paper argues that broad tightening of subsidy rules could restrict the policy space needed for the structural transformation of late industrialisers, including India. The paper therefore proposes development-sensitive flexibilities within WTO disciplines that link subsidy regulation to objective indicators of development status and sectoral dominance.