China Files WTO Complaint Against India Over PLI Schemes for EV and Auto Sectors

China has lodged an official complaint at the WTO against India’s Production Linked Incentive (PLI) schemes for the automobile and electric vehicle (EV) sectors. China's objection centres on the alleged discrimination against Chinese imports and a policy preference for domestic components under India's supportive frameworks.

China Alleges WTO Rule Violations by India’s EV and Auto Policies

In a communication dated October 20, 2025, China initiated consultations with India at the World Trade Organisation (WTO), claiming that India's PLI and EV promotion schemes are inconsistent with commitments under the Subsidies and Countervailing Measures (SCM) Agreement, the General Agreement on Tariffs and Trade (GATT) 1994, and the Trade-Related Investment Measures (TRIMs) Agreement. 

China accuses India of favouring domestic production by tying incentives to the use of local goods, disadvantaging imports from China.

Focus on Three Key Indian Programmes

The complaint specifically targets three Indian government schemes: the ₹18,100 crore National Programme on Advanced Chemistry Cell (ACC) Battery Storage, the ₹25,938 crore PLI Scheme for Automobile and Auto Components, and a policy encouraging domestic manufacturing of electric passenger cars. 

All of these initiatives underline India’s goal of cutting import dependence and building a robust domestic EV ecosystem.

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China's Strategic Interest in the Indian EV Market

China's complaint coincides with a broader context of expanding EV exports. With overcapacity and declining profits in their home market, Chinese EV makers like BYD are increasingly eyeing Asia, including India, as a growth frontier. 

China exported 2.01 million electric and plug-in hybrid vehicles in the first 8 months of 2025, a 51% rise from 2024. With the EU already slapping a 27% duty on Chinese EVs, access to India’s large auto market has become crucial for these manufacturers.

Trade Numbers and Bilateral Implications

India remains heavily reliant on Chinese imports. In FY 2024-25, exports to China fell 14.5% to $14.25 billion, while imports surged 11.52% to $113.45 billion. This widened the trade deficit to $99.2 billion. The WTO complaint introduces a new friction point in an already imbalanced trade relationship between the two economic giants.

Conclusion

China's WTO challenge against India’s PLI schemes underscores the growing global tensions around localisation policies. While India aims to boost indigenous manufacturing in its automotive and EV sectors, China is seeking equal market access amid increasing international trade restrictions. The outcome of this dispute could shape future trade dynamics between the two countries.

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