China Files Trade Dispute Against India's Automotive & Renewable Policies

WTO Sets Up Dispute Panel After China Challenges India’s PLI Schemes in Auto and Renewable Sectors​

China Escalates Trade Dispute Over India’s Incentive Measures​

New Delhi, February 24: The World Trade Organization has established a dispute settlement panel following a complaint by China against India’s measures in the automotive and renewable energy sectors. The move comes after bilateral consultations between the two countries failed to resolve the matter under the WTO framework.

According to an official in Geneva, the WTO’s Dispute Settlement Body agreed to set up the panel at China’s second request. The panel will examine specific Indian measures related to the automotive and renewable energy industries.

Allegations Against India’s PLI Schemes​

In October last year, China alleged that certain provisions in India’s Production Linked Incentive schemes for advanced chemistry cell batteries and automobiles, along with policies aimed at promoting electric vehicle manufacturing, violate global trade norms.

Beijing has claimed that the conditions under these schemes discriminate against Chinese goods and are inconsistent with international trade rules.

In its formal communication to the WTO, China stated that consultations were held on November 25, 2025, and January 6, 2026, with the objective of reaching a mutually agreed resolution. However, those discussions did not lead to a settlement.

WTO Dispute Settlement Process Explained​

Under WTO rules, consultations are the first stage in the dispute settlement mechanism. If consultations fail to deliver a satisfactory outcome, the complainant can request the establishment of a panel to adjudicate the dispute.

With the panel now constituted, it will examine the issues raised and determine whether the Indian measures in question are consistent with WTO obligations.

Both India and China are members of the WTO and can invoke its dispute resolution framework if they believe another member’s policies are adversely affecting their trade interests.

India-China Trade Ties Under Spotlight​

China remains India’s second largest trading partner, making the dispute significant in the broader context of bilateral economic relations.

In the financial year 2024-25, India’s exports to China declined by 14.5 percent to USD 14.25 billion, compared with USD 16.66 billion in 2023-24. In contrast, imports from China increased by 11.52 percent to USD 113.45 billion, up from USD 101.73 billion in the previous fiscal.

As a result, India’s trade deficit with China widened to USD 99.2 billion in 2024-25, underscoring persistent imbalances in the trade relationship.

The establishment of the WTO panel marks the formal escalation of the dispute, placing India’s industrial incentive policies under international scrutiny while adding another dimension to the evolving trade dynamics between the two Asian economies.