China Challenges India’s EV Subsidies At World Trade Organization (WTO): PLI Schemes Under Fire
SDG 9: Industry, Innovation and Infrastructure | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Commerce and Industry | Ministry of Heavy Industries | Ministry of New and Renewable Energy
China has initiated a formal dispute against India at the World Trade Organization (WTO), formally requesting consultations over India’s subsidy measures for electric vehicles (EVs), batteries, and auto parts. This move, registered as a request for consultations (the first step in the WTO dispute process), challenges key components of India’s Aatmanirbhar Bharat and Make in India industrial strategy.
China, through its Commerce Ministry, alleges that India’s measures violate multiple WTO obligations, including the National Treatment principle and constituting prohibited import substitution subsidies. The complaint specifically targets major Indian incentive programs:
The Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage (₹18,100 crore).
The PLI Scheme for the Automobile and Auto Component Industry (₹25,938 crore).
The Scheme to Promote Manufacturing of Electric Passenger Cars (2024), which offers reduced customs duties contingent on the foreign manufacturer setting up facilities in India and meeting domestic value addition (DVA) thresholds.
The Indian government has confirmed receipt of the request and stated that the Ministry of Commerce and Industry will examine China’s detailed submissions before deciding the next course of action. This escalation comes amid a persistent, widening trade deficit between the two nations, which stood at $99.2 billion in FY 2024-25.
The challenge directly confronts India’s core industrial strategy of using subsidies and incentives to encourage domestic manufacturing, creating a critical test case for the legality of Aatmanirbhar Bharat policies under existing WTO rules.
What is the WTO principle of National Treatment?→ The WTO principle of National Treatment requires that once imported goods (or foreign-sourced inputs) have entered a domestic market, they must be treated no less favorably than “like” domestically produced goods. China alleges that India’s PLI schemes and EV policies violate this rule by linking subsidies and benefits to meeting Domestic Value Addition (DVA) targets—meaning the subsidies effectively incentivize manufacturers to use Indian-made components over imported components, thereby discriminating against foreign goods.
Relevant Question for Policy Stakeholders: To what extent will the Ministry of Commerce leverage the precedent of historical Chinese subsidies and current EU tariffs to argue that India’s PLI outlay is non-discriminatory and proportionate?
Follow the full news here: https://www.wto.org/english/news_e/news25_e/ds642rfc_20oct25_177_e.htm