China Files WTO Complaint Against India’s EV Subsidies

Poonam Sharma
India’s ambitious drive towards electric vehicle (EV) production and clean energy technology is starting to rattle the world industrial order. The shakes are so intense that China has made a formal complaint to the World Trade Organization (WTO), charging India’s subsidy programs for EVs and batteries with being in contravention of global trade rules.

This diplomatic initiative represents a significant escalation of the economic competition between Asia’s two biggest rising powers — and indicates that India’s industrial policy is finally landing where it pains Beijing the most: manufacturing supremacy.

China’s Complaint and Its Timing

China’s WTO complaint is aimed at India’s Production Linked Incentive (PLI) schemes, which are offering huge subsidies and tax concessions to local EV and battery producers, sources aware of the development said. Beijing claims that they are discriminatory against foreign firms and therefore go against WTO’s principle of non-discrimination and fair competition.

But analysts term the timing of this grievance as more political than procedural. India has made a conscious effort over the past few years to reduce its reliance on Chinese imports in key sectors — from pharmaceuticals and telecom parts to solar cells and lithium-ion batteries. The EV and battery industry is the newest sector to be won over in this quest for self-reliance.

By pushing India to comply with its policies at the WTO, China is making a statement of discomfort with India’s increasing self-sufficiency, especially as multinational companies start redirecting supply chains off the Chinese mainland to India.

India’s EV Ambition

Under Prime Minister Narendra Modi’s “Make in India” and “Atmanirbhar Bharat” initiatives, New Delhi has launched several incentive programs to promote homegrown manufacturing. The PLI scheme for advanced chemistry cell (ACC) batteries, for instance, offers financial rewards to companies setting up large-scale battery production within India.

The goal is two-pronged: to lower the nation’s high import dependency — a significant portion of which is from China — and to establish an internationally competitive green industry cluster.

India has already seen interest from large players in the form of investments by companies like Reliance New Energy, Ola Electric, and Tata Chemicals, with international players like Tesla and BYD also considering Indian markets for expansion. As the government aims for 30% electric mobility by the year 2030, India’s EV revolution will become one of the world’s fastest-growing.

A Challenge to China’s Global Monopoly

China has dominated the world supply chain for EV and renewable energy components for decades. It has more than 70% of global lithium-ion battery manufacturing capacity and has most global automakers as customers for strategic materials.

India’s rapid entry into this domain, facilitated by policy support and geopolitical support from the West, undermines directly Beijing’s economic clout. The WTO complaint is hence not merely a matter of legal technicalities — it captures China’s strategic unease at relinquishing its manufacturing monopsony.

Trade experts indicate that China’s protest might be the precursor to what can soon become a full-fledged global manufacturing war. As the U.S., EU, and Japan take active measures to boost India’s industrial growth to mitigate supply chain vulnerabilities, Beijing’s domination in areas that it previously dominated outright is being threatened.

Global Reactions and Strategic Implications

The conflict is also being followed closely by large economies. Western countries, and indeed the United States and the European Union specifically, are likely to see China’s action as defensive — one that sits within the wider shift of manufacturing supply chains away from China.

For the West, India is fast becoming a credible partner in shaping a diversified and sustainable industrial ecosystem. For China, though, India’s emergence represents a possible long-term economic and strategic competitor within Asia itself.

In fact, the WTO case may take months, or even years, to settle. But politically, its impact is instant. In bringing India to the WTO, China is admitting that India’s model of policy is succeeding — and starting to damage its trade status.

India’s Likely Response

India will aggressively defend its subsidy programs on the grounds that clean energy and electric mobility incentives are necessary for sustainable development in the developing world. New Delhi can also refer to the same subsidy scheme templates in the U.S. Inflation Reduction Act (IRA) and the Green Industrial Plan of the EU, both of which provide billions of euros of state support for local green production.

Additionally, India’s WTO defense would highlight that the PLI scheme is technology-agnostic, i.e., it encourages innovation and competition over protectionism. Briefly, India would most likely present its policy as climate-focused development initiatives, not trade deviations.

The Larger Picture: A Manufacturing Realignment

Aside from the legalities, this conflict underscores a more profound shift in the global economy. Asia’s center of industrial might is gradually shifting, and India is emerging as a substitute factory base with increasing suspicion regarding China’s control of the supply chain.

China’s protest is a reminder that India’s industrial ascent is now tangible enough to trigger geopolitical pushback. As New Delhi deepens its technological foundation and global alliances, the map of 21st-century manufacturing might be rewritten — one electric car at a time.