China cries foul over India’s EV push: WTO war brews over 'Made in India' power play

China has filed a formal complaint at the World Trade Organization (WTO) alleging that India’s electric vehicle and battery subsidy schemes violate global trade rules by favoring domestic products over imports—potentially sidelining Chinese automakers seeking access to India’s massive EV market.

According to a WTO communication dated October 20, Beijing has requested consultations with New Delhi under the WTO’s dispute settlement mechanism, targeting three Indian programs: the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) Battery Storage, the PLI Scheme for Automobile and Auto Component Industry, and a separate policy to promote electric passenger car manufacturing.

China claims these measures “condition eligibility for and the disbursement of incentives” on the use of domestically produced goods, discriminating against Chinese-origin products. Such restrictions, it says, violate India’s obligations 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).

“These measures nullify or impair benefits accruing to China,” the WTO filing states. China is seeking a mutually agreed date for consultations as the first step in resolving the dispute.

India’s incentive programs aim to boost local EV and battery production while reducing import dependency. The PLI-ACC scheme, launched in May 2021, includes a ₹18,100 crore outlay to develop 50 GWh of domestic battery capacity. The auto-focused PLI scheme, approved in September 2021 with ₹25,938 crore, targets domestic production of advanced automotive technologies and job creation.

But with Chinese EV makers like BYD facing shrinking profits and regulatory barriers in the EU—including a 27% tariff—India’s large, emerging EV market has become strategically vital for expansion.

Despite a 14.5% decline in India’s exports to China in 2024–25, imports from China rose 11.5%, widening India’s trade deficit with Beijing to $99.2 billion.

WTO consultations could now set the stage for a formal dispute panel if the two sides fail to reach a settlement.