The economy of modern India has become the fastest growing economy in the world, because the country’s domestic consumption is higher than other countries. Be it agriculture or EV, India is achieving new heights of progress in every sector. In case of EV products, India is focusing on domestic manufacturing. Dragon is not liking this, due to which he has filed a complaint with the World Trade Organization (WTO).
China Alleges that India’s electric vehicle and battery subsidy schemes are giving preference to domestic products over imports, which violates global trade rules. China says Chinese automakers seeking access to India’s huge EV market are potentially being sidelined.
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According to a communication letter from WTO, Beijing has requested for settlement under three Indian programs under the WTO Settlement Mechanism. China has sought a production linked incentive (PLI) scheme for advanced chemical cell (ACC) battery storage, a PLI scheme for the automobile and auto industry, and a separate policy to promote electric passenger car manufacturing.
What other allegations did China make against India?
China claims that these measures impose ‘conditions for eligibility and distribution of incentives’ on the use of domestically produced goods, which is discriminatory against Chinese products. China says such restrictions violate India’s obligations under the Subsidies and Compensatory Measures (SCM) Agreement, the General Agreement on Tariffs and Trade (GATT) 1994, and the Agreement on Trade-Related Investment Measures (TRIMS).
The WTO filing states that these measures cancel or reduce the benefits to China. China is demanding a date for consultations as a first step to resolve the dispute.
What is the meaning of these schemes of India?
India’s incentive programs aim to promote local electric vehicle and battery production while reducing dependence on imports. The PLI-ACC scheme launched in May 2021 includes an outlay of ₹18,100 crore to develop 50 GWh domestic battery capacity. The auto-focused PLI scheme, approved in September 2021 at a cost of ₹25,938 crore, aims to spur domestic production of automotive technology and generate employment.
India’s trade deficit increases
But Chinese EV makers like BYD face declining profits and regulatory hurdles in the EU, including 27% tariffs. However, China’s imports have still increased. India’s exports to China declined by 14.5% in 2024-25, but imports from China increased by 11.5%. Due to this, India’s trade deficit with Beijing increased to $99.2 billion.
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