China Accuses India Of Violating WTO Rules On Electric Vehicle Subsidies
JAKARTA The Chinese government has officially submitted an objection to the World Trade Organization (WTO) on India's subsidy policy aimed at electric vehicles (EVs) and battery cell production. This step was taken because China considered the country's support to violate international trade rules.
The Chinese claim states that the PM E-Drive program and Production Linked Incentive (PLI) incentives in India provide discriminatory treatment for foreign producers. The PM E-Drive program, launched in 2024, provides subsidies and tax incentives to manufacturers and suppliers who build EVs and their components in India.
Meanwhile, the PLI scheme that has been running since 2020 provides additional incentives to producers based on production volume and component locality in India. As reported by NDTV, Friday, October 17.
China also stated that this support has the potential to become an import-substitution of subsidies, namely a subsidy that encourages the use of domestic products compared to imported goods, something that is prohibited by the national treatment clause in the WTO regulation.
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According to a Chinese government statement, the available incentives require the level of local content in components, so that companies that produce abroad or depend on imports will suffer losses.
In China's view, the policy gives India's EV market an unfair competitive advantage to local companies. As a first step in the WTO dispute resolution process, China through its trade ministry has "asked for consultation" with India.
The initial phase in the WTO dispute settlement path, and if Indian policy is deemed to violate WTO obligations, India could be asked to revise or partially revoke its subsidy policy.
This objection comes at the same time as India's efforts to formulate a new scheme that supports the production of end-to-end' magnets from rare earth oxide. At the same time, China imposes restrictions on export exports of rare earth magnets and export controls on aspects of battery supply chains such as lithium, cathode, and graphite anodes.