Understanding China's WTO Complaint Against India's PLI Schemes

China’s WTO Complaint Against India’s PLI Schemes for EVs and Batteries

Introduction

On 20 October 2025, China filed a formal complaint at the World Trade Organization (WTO) challenging India’s Production-Linked Incentive (PLI) schemes for electric vehicles (EVs), advanced chemistry cells (ACC), and auto components. China claims that India’s local production and domestic content requirements violate WTO agreements such as the Subsidies and Countervailing Measures Agreement, GATT 1994, and TRIMs. India, however, views PLI as a strategic industrial policy promoting self-reliance and global green technology competitiveness.

1. What is the nature of China’s complaint at the WTO?

China contends that India’s PLI schemes favour domestic production by imposing local value-addition and sourcing conditions, allegedly discriminating against foreign producers, including Chinese firms, and breaching WTO obligations.

2. Which Indian programmes are being challenged?

• The National Programme on Advanced Chemistry Cell (ACC) Battery Storage.
• The PLI Scheme for Automobile and Auto Components Industry.
• The Scheme to Promote Manufacturing of Electric Passenger Cars in India.

3. Why is this dispute significant for India’s industrial policy?

This marks the first direct WTO challenge by China against India’s flagship PLI framework. For India, PLI is more than a subsidy—it is a key tool for industrial revival, reducing import dependence, and boosting global competitiveness in clean technologies such as EVs and batteries.

4. What are the trade and strategic implications for India and China?

India’s trade deficit with China remains substantial, with imports exceeding 110 billion USD and exports around 14 billion USD in 2024-25. Chinese firms, facing excess capacity and slowing domestic demand, seek overseas markets. India’s PLI framework limits easy market access. The case tests India’s ability to balance domestic industrial ambitions with WTO trade commitments, setting precedent for future incentive programmes.

5. What happens next under the WTO process?

China has requested formal consultations under the WTO’s Dispute Settlement Understanding (DSU). If unresolved within 60 days, China may seek the formation of a dispute panel to adjudicate the matter.

6. What are potential responses for India?

India may argue that the PLI schemes comply with WTO law, highlighting transparency and equal access for all eligible firms. Alternatively, India could adjust the schemes to avoid conflicts while maintaining a manufacturing-led growth strategy.

7. How does this issue link to the GS syllabus?

• GS Paper II: International trade and WTO mechanisms.
• GS Paper III: Indian economy — manufacturing, industrial policy, and self-reliance initiatives.

Quotation

“The strength of a nation lies not merely in its production lines, but in how it aligns domestic ambition with global rules.”