Why China is miffed with India's EV incentive programs
What's the story
China has sought the World Trade Organization's (WTO) intervention in a trade dispute with India. The request comes after bilateral talks failed to resolve the matter. Beijing is challenging India's incentive programs for automobiles, batteries, and electric vehicles (EVs), claiming they violate global trade rules by favoring domestic goods over imports. The request will be presented at the WTO's Dispute Settlement Body meeting on January 27 in Geneva.
Trade dispute
China's allegations against India's PLI schemes
China's complaint, filed in October 2025, alleges that India's PLI schemes for advanced chemistry cell batteries and automobiles discriminate against Chinese goods. The complaint also targets a policy promoting local manufacturing of electric passenger cars. China argues these measures violate its rights under the Subsidies and Countervailing Measures Agreement, the General Agreement on Tariffs and Trade (GATT) 1994, and the Trade-Related Investment Measures Agreement.
Trade imbalance
India's response to China
The trade dispute comes amid a growing trade imbalance between India and China. In 2024-25, India's exports to China fell by 14.5% to $14.25 billion while imports rose by 11.52% to $113.45 billion, widening the trade deficit to $99.2 billion. To note, India has launched several initiatives including an ₹18,100 crore PLI scheme for advanced battery storage in 2021, and a ₹25,938 crore incentive program for automobiles and components manufacturing in September 2021.
Dispute resolution
WTO's dispute settlement process and China's complaint
The WTO's dispute settlement process starts with consultations. If these don't yield a satisfactory solution, the complainant can request a panel to rule on the issue. China's complaint specifically mentions three programs: PLI for advanced chemistry cell battery storage, PLI scheme for automobile and auto component industry, and scheme to promote manufacturing of electric cars in India.