China Urges WTO to Establish Panel Over India’s Auto and EV Incentive Schemes
China has called on the World Trade Organization (WTO) to form a panel to address its complaint against India regarding the latter’s incentive schemes for the automotive and electric vehicle (EV) sectors. This request follows unsuccessful bilateral discussions aimed at resolving the dispute.
Key Details of China’s Complaint
– Discriminatory Measures: China alleges that India’s measures favor domestic goods over imports, specifically discriminating against Chinese products.
– Reference to PLI Schemes: In October 2022, Beijing claimed that certain conditions attached to India’s Production Linked Incentive (PLI) schemes for advanced chemistry cell batteries and automobiles violate WTO regulations by unfairly disadvantaging Chinese goods.
– Failed Consultations: In communications to the WTO, China noted that two rounds of consultations—on November 25, 2025, and January 6, 2026—did not lead to a mutually agreeable solution.
– Formal Request: On January 16, 2023, China formally requested the Dispute Settlement Body to establish a panel to review the situation.
Next Steps in the Dispute
– Agenda Inclusion: China has also requested that this matter be included in the agenda of the forthcoming Dispute Settlement Body meeting, scheduled for January 27 in Geneva.
– WTO Dispute Resolution Process: According to WTO rules, seeking consultations is the initial step in the dispute resolution process. If no satisfactory resolution arises, the complainant may request a panel to assess the complaint.
India’s Incentive Schemes Under Scrutiny
China’s complaint centers on several specific programs in India:
– Production Linked Incentive Schemes for:
– Advanced Chemistry Cell (ACC) Battery Storage
– Automobiles and Auto Components
– Promoting Electric Passenger Cars
These programs are perceived by China as inconsistent with India’s obligations under several WTO agreements, including the SCM (Subsidies and Countervailing Measures) Agreement, the GATT (General Agreement on Tariffs and Trade) 1994, and the TRIMs (Trade-Related Investment Measures) Agreement.
Trade Relations and Impact
– Bilateral Trade: China remains India’s second-largest trading partner. In the most recent fiscal year, India’s exports to China decreased by 14.5%, amounting to USD 14.25 billion, while imports rose by 11.52% to USD 113.45 billion, widening India’s trade deficit with China to USD 99.2 billion.
– Chinese EV Market: China’s objection highlights its interest in exporting electric vehicles to India, a market deemed vital for growth by Chinese manufacturers facing overcapacity and declining domestic sales.
The Future of EV Manufacturing in India
The Indian government has implemented various programs to boost domestic EV manufacturing, including:
– PLI for ACC: Approved in May 2021 with an outlay of ₹18,100 crore aimed at enhancing battery cell production and reducing reliance on imports.
– Automobile and Auto Components PLI: Launched in September 2021, with ₹25,938 crore budgeted to stimulate domestic manufacturing for Advanced Automotive Technology.
– E-Vehicle Manufacturing Policy: Announced in March 2024 to position India as a leading manufacturer of cutting-edge electric vehicles.
As the dispute unfolds, the implications for global trade and relationships between India and China will be significant, particularly regarding the competitive landscape in the burgeoning EV market.