WTO to examine China’s complaint on India’s green tech schemes
Geneva: China has formally requested dispute consultations with India at the World Trade Organization (WTO), alleging that a series of Indian incentive programmes in the automotive and renewable energy technology sectors discriminate against imported products and are inconsistent with multiple WTO agreements. The WTO circulated China’s request for consultations among its members on 20 October 2025, marking the initiation of a trade dispute that could have major implications for India’s clean energy and electric mobility policies.
In its communication titled “India – Measures Concerning Trade in the Automotive and Renewable Energy Technology Sectors” dated 15 October 2025, China’s delegation in Geneva submitted the request to India under Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXIII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), Articles 4 and 30 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and Article 8 of the Agreement on Trade-Related Investment Measures (TRIMs Agreement). China said the measures in question include incentives to promote production of advanced chemistry cell (ACC) batteries, automobiles and auto components, and electric vehicles (EVs) in India. Beijing claims that these incentives are contingent upon the use of domestic goods over imported ones or otherwise discriminate against Chinese products, in violation of WTO rules.
The complaint focuses on three specific Indian government schemes. The first is the Production Linked Incentive National Programme on Advanced Chemistry Cell (ACC) Battery Storage, or the PLI ACC Scheme, adopted in June 2021 with a budgetary outlay of ₹18,100 crore. The programme seeks to incentivise the establishment of giga-scale ACC battery manufacturing facilities in India and to reduce reliance on imports by promoting domestic value addition. It targets a cumulative domestic manufacturing capacity of 50 gigawatt-hours (GWh) for ACC batteries and an additional 5 GWh for high-performance technologies, with each beneficiary company required to set up at least 5 GWh of manufacturing capacity. To qualify for incentives, firms must commission their plants within two years of allocation and meet phased domestic value addition (DVA) targets—at least 25 per cent within two years and 60 per cent within five years. Beneficiaries must also make a mandatory investment of ₹225 crore per GWh. The DVA is calculated as the ratio of actual value added to the net sale value of ACCs, excluding indirect taxes. Actual value added is determined by deducting the cost of raw materials, packing materials, fuel, and foreign currency expenses from the net sale value and adding the value contributed by ancillary or domestic manufacturers. Additionally, a change in the Harmonised System of Nomenclature (HSN) code at the six-digit level and final manufacturing in India are required for domestic value addition eligibility. Payments under this scheme are disbursed quarterly over a five-year period after commissioning, with annual subsidies capped at the equivalent of 20 GWh of production per firm. The disbursement is based on the subsidy rate per kilowatt-hour of ACC sold, the DVA percentage achieved, and the actual production volume. The programme was notified in the Gazette of India, S.O. 2208(E), on June 9, 2021.
The second measure cited in China’s request is the Production Linked Incentive Scheme for the Automobile and Auto Component Industry, or the PLI Auto Scheme, adopted in September 2021 with a total outlay of ₹25,938 crore over five years. The programme is designed to boost domestic manufacturing of advanced automotive technology (AAT) products, including vehicles and components. It targets both existing automotive manufacturers and new investors entering the sector. Beneficiaries are selected through an application process and must commit to a minimum cumulative domestic investment over five years. The scheme consists of two components: the Champion Original Equipment Manufacturer (OEM) Incentive Scheme, which supports AAT vehicle manufacturers such as those producing battery electric and hydrogen fuel cell vehicles, and the Component Champion Incentive Scheme, which covers manufacturers of advanced technology components, CKD/SKD kits, and vehicle aggregates across all categories including two-wheelers, three-wheelers, passenger and commercial vehicles, tractors and even military-use automobiles. To receive incentives, only sales of pre-approved eligible products achieving at least 50 per cent DVA are considered. DVA is determined by deducting the value of imported inputs and materials from the ex-factory price of the product. Manufacturers must provide documentation, such as bills of entry and supplier declarations to designated Testing Agencies for verification. Incentives are calculated as a percentage of incremental eligible sales value compared with a base year, and disbursements are made annually over five years starting from the financial year 2023–24. The PLI Auto Scheme was officially notified in the Gazette of India, S.O. 3946(E), on September 23, 2021.
The third programme challenged by China is the Scheme to Promote Manufacturing of Electric Passenger Cars in India, also called the EV Passenger Cars Scheme, adopted in March 2024. This programme seeks to attract global EV manufacturers and make India a production hub for electric four-wheelers. It allows approved applicants to import completely built electric passenger cars at a reduced customs duty of 15 per cent for up to five years from the date of approval, provided each imported vehicle has a minimum cost, insurance and freight (CIF) price of USD 35,000. The scheme caps annual imports at 80,000 cars per beneficiary with carry-forward permitted for unused quotas. The total duty foregone is limited to the lower of ₹6,484 crore or the applicant’s committed investment. Beneficiaries must set up manufacturing facilities in India within three years with a minimum investment of ₹4,150 crore. The scheme prescribes DVA milestones of 25 per cent by the third year and 50 per cent by the fifth year. DVA is defined and calculated in the same manner as under the PLI Auto Scheme. To ensure compliance, participants are required to furnish a bank guarantee equal to the higher of the total duty foregone or ₹4,150 crore, which may be invoked in case of non-achievement of investment or DVA targets. The return of this guarantee depends on meeting both obligations. The EV Passenger Cars Scheme was notified in the Gazette of India, S.O. 1363(E), on 15 March 2024.
China’s request alleges that all three programmes violate core WTO disciplines. It argues that the DVA-linked subsidies are inconsistent with Articles 3.1(b) and 3.2 of the SCM Agreement because they are contingent upon the use of domestic goods over imported ones, constituting prohibited subsidies. China also claims that these measures breach Article III:4 of GATT 1994 by according less favourable treatment to imported products than to like domestic goods, and that they are inconsistent with Article 2.1 of the TRIMs Agreement, which prohibits trade-related investment measures violating national treatment. Moreover, China asserts that the EV Passenger Cars Scheme violates Article I:1 of GATT 1994 by granting an advantage to certain countries that is not immediately and unconditionally extended to all WTO members, thereby breaching the most-favoured-nation obligation. Beijing maintains that the combined effect of these measures nullifies or impairs benefits accruing to China under the WTO agreements.
The request also specifies that it covers not only the identified schemes but also any related amendments, supplements, extensions, replacements, renewals or implementing measures. China reserves the right to raise additional claims or evidence during the consultations and in any future request for the establishment of a dispute settlement panel under Article 6.2 of the DSU. The document includes annexes listing evidence concerning the existence and nature of subsidies under each scheme and indicates that further supporting materials may be submitted later.
Under WTO procedures, the filing of a request for consultations marks the formal initiation of a dispute. Consultations provide an opportunity for the parties to discuss the matter and attempt to resolve it without litigation. If the consultations fail to achieve a mutually satisfactory outcome within 60 days, China may ask the WTO’s Dispute Settlement Body to establish a panel to adjudicate the case. China said it looks forward to receiving India’s reply and to agreeing on a mutually convenient date for consultations.
The measures under challenge—central to India’s “Make in India” industrial policy launched in 2014—are aimed at fostering domestic manufacturing capacity in high-technology sectors and reducing import dependence in batteries, electric vehicles, and automotive components. The case thus adds a new front to global trade tensions surrounding clean energy and mobility supply chains, as both countries seek to strengthen their positions in the rapidly expanding green technology market.
– global bihari bureau
