China has lodged a formal complaint with the World Trade Organization (WTO) against India, challenging its subsidy programs for electric vehicles (EVs) and battery production. The Ministry of Commerce of the People's Republic of China (MOFCOM) alleges that India’s measures constitute import substitution subsidies, which are prohibited under WTO regulations. These subsidies, China claims, unfairly favor Indian manufacturers, skewing competition in the rapidly expanding global EV and battery markets. The move marks a significant escalation in trade disputes between the two Asian powers.

According to MOFCOM, India’s policies, including incentives under the Production Linked Incentive (PLI) scheme for EVs and advanced chemistry cell (ACC) batteries, provide domestic companies with an undue advantage, sidelining foreign competitors. China argues that these measures distort the market by promoting local production over imports, violating WTO commitments to fair trade. The complaint specifically targets India’s push to bolster its EV ecosystem, a cornerstone of its green energy ambitions, which has attracted significant investments from domestic firms like Tata Motors and Reliance Industries.

China has requested formal consultations with India at the WTO, the first step in the organization’s dispute resolution process, urging New Delhi to rectify what it calls “erroneous practices.” MOFCOM emphasized that Beijing is prepared to take further measures to protect its domestic industries, which have faced increasing competition from India’s burgeoning EV sector. This follows reports of Chinese battery giants like CATL facing restrictive policies in India, including higher import tariffs and local sourcing requirements, which have strained bilateral trade relations.

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The complaint comes amid heightened geopolitical tensions and India’s aggressive drive toward self-reliance in critical technologies. Experts warn that the dispute could delay India’s EV adoption goals, which rely heavily on subsidized manufacturing to compete globally. If unresolved through consultations, the issue may escalate to a WTO panel, potentially impacting India’s trade policies and its standing in the global clean energy race. As both nations vie for dominance in the EV market, this clash underscores the growing friction between economic nationalism and global trade norms.

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