China launches WTO trade dispute against India over EV subsidies
According to China, India’s measures grant its domestic industry an unfair advantage; India must enter into consultations with China within 30 days at the WTO
China has launched a trade dispute against India at the World Trade Organization (WTO) over New Delhi’s alleged subsidy measures on electric vehicles (EVs) and batteries — a move that some observers described as the proverbial case of the “pot calling the kettle black”, according to people familiar with the complaint.
China formally requested on Wednesday (October 15) that India enter into Article 4 consultations under the WTO’s Dispute Settlement Understanding (DSU). Although the full details of China’s complaint have not yet been circulated, Beijing said it was seeking consultations concerning India’s subsidies related to EV and battery manufacturing.
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China’s claim
China alleged that India’s measures “appear to violate several WTO obligations”, including those pertaining to national treatment—that is, not providing equal treatment to imported EVs and batteries compared to domestically produced ones. Beijing further claimed that India’s measures “constitute import substitution subsidies, which are clearly prohibited”.
According to China, India’s measures for EVs and batteries—including the alleged denial of equal treatment for imported products—grant “India’s domestic industry an unfair competitive advantage, thereby harming China’s interests”.
China indicated that it would take firm action to safeguard the legitimate rights and interests of its domestic industry. It also alleged that “a series of India’s trade and economic measures over time have raised widespread concern among WTO members regarding their compliance with WTO rules”, urging New Delhi to abide by its WTO commitments and “immediately correct its erroneous practices”.
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What next?
As a first step, India is required to enter into consultations with China within 30 days at the WTO to address the issues raised in the complaint. If the two sides fail to reach an amicable settlement during these consultations, China can request the establishment of a dispute settlement panel to adjudicate on its specific allegations.
If a WTO panel eventually rules in China’s favour, India could appeal the panel’s findings before the Appellate Body—a move that, under current circumstances, would effectively render the dispute unenforceable due to the Appellate Body’s non-functioning status, said a legal analyst who asked not to be named.
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Pot calling kettle black?
Significantly, China itself is known to have provided billions of dollars in subsidies over the years to build its EV and battery industries, the analyst noted, adding that it is “somewhat ironic” to see Beijing initiating this dispute.
China is the world’s largest manufacturer of EVs and batteries and is expanding production capacity in several European countries. However, the European Union has imposed countervailing (anti-subsidy) duties on Chinese EVs, while the United States has effectively blocked their entry into its market.
Observers say it will be interesting to see how the resolution of this dispute unfolds in the coming months, as any prolonged standoff could have implications for the broader bilateral economic relationship between the two Asian giants.
