China Seeks WTO Panel Against India Over Auto And EV Incentive Schemes

China has asked the World Trade Organisation (WTO) to set up a dispute settlement panel in its case against India over New Delhi’s incentive schemes for automobiles, batteries and electric vehicles, after bilateral consultations failed to resolve the matter.

In a communication dated January 16, China said it had held consultations with India on November 25, 2025, and January 6, 2026, as required under WTO rules, but the talks did not lead to a mutually agreed solution. Beijing has therefore requested the WTO’s Dispute Settlement Body (DSB) to establish a panel to examine the dispute and has asked that the request be placed on the agenda of the next DSB meeting scheduled for January 27 in Geneva.

The case centres on India’s Production Linked Incentive (PLI) schemes and related policies for advanced chemistry cell (ACC) batteries, automobiles, auto components and electric vehicles. China alleges that certain conditions under these programmes discriminate against imported goods, including those of Chinese origin, by favouring the use of domestically produced products.

According to China’s complaint, the measures appear to be inconsistent with India’s obligations under the WTO’s Subsidies and Countervailing Measures (SCM) Agreement, the General Agreement on Tariffs and Trade (GATT) 1994, and the Trade-Related Investment Measures (TRIMs) Agreement.

The programmes cited by China include the PLI scheme, the National Programme on Advanced Chemistry Cell Battery Storage, the PLI Scheme for the Automobile and Auto Component Industry, and the Scheme to Promote Manufacturing of Electric Passenger Cars in India.

Under WTO rules, seeking consultations is the first step in the dispute settlement process. If consultations fail, the complainant is entitled to request the establishment of a panel to adjudicate the matter.

The dispute comes against the backdrop of strained trade ties between the two Asian economies. China is India’s second-largest trading partner, but bilateral trade remains heavily skewed. In 2024-25, India’s exports to China fell 14.5 per cent to USD 14.25 billion, while imports rose 11.52 per cent to USD 113.45 billion, widening India’s trade deficit with China to USD 99.2 billion.

China’s challenge to India’s EV-related incentives also coincides with Beijing’s efforts to expand overseas sales of its electric vehicles amid overcapacity and intense price competition at home. Chinese automakers, including firms such as BYD, have been increasingly targeting overseas markets in Asia and Europe. According to the China Passenger Car Association, Chinese manufacturers exported about 2.01 million pure electric and plug-in hybrid vehicles in the first eight months of the year, a 51 per cent increase from a year earlier.

However, Chinese EV makers have faced growing resistance abroad, including the European Union’s decision to impose tariffs of up to 27 per cent on Chinese electric vehicles.

India, meanwhile, has rolled out a series of measures to promote domestic manufacturing and reduce import dependence in the EV ecosystem. The ACC Battery Storage PLI scheme, approved in May 2021 with an outlay of Rs 18,100 crore, aims to support 50 GWh of battery manufacturing capacity. In September 2021, the government approved a Rs 25,938 crore PLI scheme for automobiles and auto components to boost the production of advanced automotive technology products.

More recently, in March 2024, India approved a policy to promote the country as a manufacturing hub for electric vehicles by attracting investments from global EV makers, reinforcing its push to build a domestic EV manufacturing base.