What's Happening?
China has filed a complaint against India at the World Trade Organization (WTO), alleging that India's Production Linked Incentive (PLI) schemes for advanced chemistry cell batteries and electric vehicles
violate global trade rules. The complaint, dated October 20, 2025, claims that these measures favor domestic goods over imports, particularly affecting Chinese products. China has requested consultations with India under the WTO's dispute settlement mechanism, marking the first step in resolving the issue. The complaint highlights three specific programs: the PLI for advanced chemistry cell battery storage, the PLI scheme for the automobile and auto component industry, and the scheme to promote manufacturing of electric passenger cars in India. China argues that these measures are inconsistent with India's obligations under the Subsidies and Countervailing Measures Agreement, the General Agreement on Tariffs and Trade 1994, and the Trade-Related Investment Measures Agreement.
Why It's Important?
The complaint underscores the growing tensions between China and India, two major players in the global trade arena. China's challenge to India's EV incentive schemes could have significant implications for the automotive and renewable energy sectors, potentially affecting trade dynamics and market access. If the WTO rules in favor of China, India may need to revise its policies, impacting domestic manufacturers and foreign investors. The dispute also highlights the strategic importance of the electric vehicle market, as countries vie for dominance in this rapidly growing sector. For China, the complaint is part of a broader strategy to expand its EV exports, particularly to India, which is seen as a key market for growth.
What's Next?
The next step in the WTO dispute process involves consultations between China and India. If these consultations do not lead to a satisfactory resolution, China can request the establishment of a WTO panel to adjudicate the matter. The outcome of this dispute could influence future trade negotiations and policies between the two countries. Additionally, other WTO member countries may closely monitor the case, as it could set a precedent for similar trade disputes involving incentive schemes and domestic content requirements.
