China Raises Objection to India’s PLI and EV Policies, Files Complaint at WTO

Amidst falling domestic sales and profit margins due to excessive EV production capacity and price wars in China, Chinese companies are exploring foreign markets, particularly in the EU and Asia. Possibly as a result, China has filed a formal complaint with the World Trade Organization (WTO) against India’s Production Linked Incentive (PLI) scheme.

China claims that the PLI scheme, which promotes the manufacturing of Advanced Chemistry Cell (ACC) batteries, automobiles, and electric vehicles, contains provisions that violate global trade rules. According to a WTO communication issued on October 20, Beijing has requested consultations with India under the WTO’s Dispute Settlement Mechanism.

China argues that the incentives under India’s policies are dependent on the use of domestically manufactured goods instead of imported ones, which results in discrimination against Chinese products. These measures allegedly contradict India’s commitments under the SCM Agreement (Subsidies and Countervailing Measures), GATT 1994, and the TRIMs Agreement (Trade-Related Investment Measures).

The WTO communication further states: “...these measures appear to nullify or impair the benefits accruing to China under the mentioned agreements.” China is now awaiting India's response and a mutually agreed date for consultations.