China has filed a formal complaint with the World Trade Organization (WTO), alleging that India’s subsidy programs for electric vehicles and batteries violate global trade rules by favoring domestic products over imports, which could sideline Chinese automakers seeking access to India’s vast electric vehicle market.
According to a WTO communication dated October 20, Beijing requested consultations with New Delhi under the WTO dispute settlement mechanism, targeting three Indian programs: the Production Linked Incentive (PLI) program for Advanced Chemistry Cell (ACC) battery storage, the PLI program for the automobile and auto components industry, and a separate policy to promote the manufacture of electric passenger cars.
China claims that these measures “condition eligibility and payment of incentives” to the use of goods produced in the country, which constitutes discrimination against products of Chinese origin. Such restrictions, it claims, violate India’s obligations under the Agreement on Subsidies and Countervailing Measures (SCM), the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Trade-Related Investment Measures (TRIMs).
“These measures nullify or impair the benefits accruing to China,” says the request filed with the WTO. China is seeking a mutually agreed date for consultations as a first step toward resolving the dispute.
India’s incentive programs aim to boost local production of electric vehicles and batteries while reducing dependence on imports. The PLI-ACC scheme, launched in May 2021, includes an outlay of ₹18,100 crore to develop 50 GWh of national battery capacity. The automobile-focused PLI scheme, approved in September 2021 with an amount of ₹25,938 crore, targets domestic production of advanced automobile technologies and employment generation.
But as Chinese electric vehicle makers like BYD face falling profits and regulatory barriers in the EU, including 27% tariffs, India’s vast emerging electric vehicle market has become strategically vital for expansion.
Despite a 14.5% decline in Indian exports to China in 2024-25, imports from China increased by 11.5%, widening India’s trade deficit with Beijing to $99.2 billion.
WTO consultations could now pave the way for a formal panel if the two sides fail to reach a settlement.
