Rapid Fire
China Challenges India’s EV Subsidies at WTO
- 22 Oct 2025
- 2 min read
China has approached the World Trade Organization (WTO) against India, alleging that the country’s electric vehicle (EV) and battery subsidies provide an “unfair competitive advantage” to domestic manufacturers.
- Allegations by China: China claims India’s subsidies breach WTO obligations, including the national treatment principle (requiring that imported goods be treated no less favorably than domestic goods once they enter the market).
- India’s EV subsidies on best-selling vehicles (including GST cuts, tax waivers, and PLI support) offer around 46% cost aid, far higher than the 10–26% subsidy levels in other major economies.
- China argues these measures breach the WTO’s Agreement on Subsidies and Countervailing Measures (which provides rules for use of government subsidies and remedies to address subsidized trade) by favouring Indian producers and distorting fair competition.
- China also claims that the subsidies also amount to prohibited import substitution subsidies (government financial aid for companies that are conditional on using domestic goods instead of imported ones, a practice deemed to distort international trade unfairly), favoring domestic EV industries over foreign competitors.
- Key EV Subsidy Schemes in India:
- FAME India Scheme (Faster Adoption and Manufacturing of Electric Vehicles).
- PM e-Drive Scheme.
- Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Batteries.
- State-Level Incentives: Many states like Karnataka provide additional subsidies, tax exemptions, or reduced registration fees for EVs.
| Read more: India's Shift to Electric Vehicles |
