China has lodged a formal complaint with the World Trade Organization (WTO) against India, alleging that New Delhi’s subsidies for electric vehicle (EV) and battery cell production violate international trade rules. The dispute focuses on India’s PM E-Drive and Production Linked Incentive (PLI) programmes, which Beijing claims unfairly favour domestic manufacturers over foreign competitors.
The PM E-Drive scheme, launched in 2024, provides tax breaks and subsidies to automakers and suppliers who build EVs and related components in India, spanning two-wheelers, three-wheelers, passenger cars and commercial vehicles. The PLI programme, introduced in 2020, offers performance-based incentives tied to domestic production volumes and localisation levels, with major Indian and foreign companies — including Hyundai, Tata, Ola Electric and Reliance — among the beneficiaries.
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China’s Ministry of Commerce said the measures breach WTO obligations under the national-treatment clause and constitute “import-substitution subsidies,” which encourage companies to use locally produced goods instead of imports. According to the complaint, India’s incentive design — linking subsidies to domestic value addition — effectively discriminates against foreign-made components.
Under WTO rules, China’s filing initiates a formal consultation process with India, marking the first stage in the dispute settlement procedure. If consultations fail to resolve the issue within 60 days, China could request the establishment of a WTO dispute panel to investigate the matter. A ruling against India could force revisions to its EV subsidy framework.
Trade analysts say the move underscores China’s growing assertiveness in defending its dominance in the global EV supply chain. The complaint also comes as India prepares a new subsidy scheme aimed at promoting “end-to-end” domestic magnet production using rare earth materials — an area where Beijing has recently tightened export restrictions.
China has already imposed export controls on key components in the lithium-ion battery industry, including cathodes, anodes and certain grades of lithium materials. Observers view the WTO action as part of a broader contest between the two Asian powers over control of the clean energy and advanced manufacturing sectors.
Source: autocarpro.in