China has filed a formal complaint with the World Trade Organization (WTO), alleging that India’s electric vehicle (EV) and battery subsidy programs violate global trade rules by favoring domestic products and disadvantaging Chinese manufacturers seeking access to India’s growing EV market. Beijing requested consultations with New Delhi under the WTO dispute settlement mechanism on 20 October 2025, targeting three Indian policies: the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) battery storage, the PLI scheme for the automobile and auto component industry, and a separate policy promoting electric passenger car production.
China claims that these measures “condition eligibility for and the disbursement of incentives” on the use of domestically produced goods, effectively discriminating against Chinese-origin products. According to the filing, the restrictions violate India’s commitments under the Subsidies and Countervailing Measures (SCM) Agreement, the General Agreement on Tariffs and Trade (GATT) 1994, and the Agreement on Trade-Related Investment Measures (TRIMs). The filing also states that the Indian policies “nullify or impair benefits accruing to China.” China is seeking a mutually agreed date for consultations as the first step in resolving the dispute.
India’s incentive programs aim to strengthen domestic EV and battery production while reducing reliance on imports. The PLI-ACC scheme, launched in May 2021, carries an outlay of ₹18,100 crore to develop 50 GWh of domestic battery capacity. The auto-focused PLI scheme, approved in September 2021 with a budget of ₹25,938 crore, targets the local production of advanced automotive technologies and the creation of jobs.
For Chinese EV companies such as BYD, India represents a strategically vital market as profits shrink elsewhere and regulatory barriers, including a 27% tariff in the EU, limit expansion. Trade data shows that while India’s exports to China declined by 14.5% in 2024–25, imports from China rose 11.5%, widening India’s trade deficit with Beijing to $99.2 billion.
The WTO consultations could pave the way for the establishment of a formal dispute panel if India and China fail to reach a settlement through dialogue, potentially escalating tensions over India’s “Made in India” EV push.
(Source: Business Today)
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