China has approached the World Trade Organization (WTO), alleging that India’s subsidies for electric vehicles and batteries give domestic firms an unfair advantage over foreign competitors.
Key Details of the Complaint
- Formal Request to WTO: China has formally requested consultations with India at the WTO, claiming India’s subsidy policies violate international trade rules.
- Targeted Sectors: The complaint focuses on India’s incentives for electric vehicles (EVs) and battery manufacturing, including tax relief, production-linked incentives (PLI), and direct subsidies.
- Allegations: China argues that these measures provide Indian companies with an unfair competitive advantage compared to foreign manufacturers.
India’s Subsidy Programs
- FAME-II Scheme: Offers financial incentives for electric vehicle adoption, including reduced GST and road tax benefits.
- PLI for Batteries: Financial support for domestic battery production aimed at reducing dependence on imports.
- Indirect Incentives: Other benefits include capital subsidies, low-interest loans, and preferential procurement policies.
Legal Implications
- WTO Rules: The complaint cites violations related to import substitution subsidies and the principle of national treatment, which requires fair treatment of domestic and foreign goods.
- Dispute Procedure: The first step is WTO consultations. If unresolved, China may request the establishment of a panel for formal adjudication.
- Potential Outcomes: If the WTO rules against India, the country may have to revise subsidy schemes or face trade sanctions.
Broader Impact
- Trade Relations: Adds to growing tensions between India and China, especially in green technology and EV supply chains.
- Global EV Market: Highlights the increasing scrutiny of government incentives in the international EV industry.
- Domestic Policy: India may need to balance its green energy ambitions with international trade compliance.
