New Delhi: After being unable to fulfil its targets of Electric Vehicle (EV) and other automobile exports to India, China has lodged a complaint with the World Trade Organisation (WTO).
China has claimed that certain conditions in India’s Production Linked Incentive (PLI) schemes for advanced chemistry cell battery, automobiles and the policy to promote the manufacturing of EVs violate global trade rules.
The Geneva-based WTO has confirmed that China has sought consultations with India on these measures under WTO’s dispute settlement mechanism. In its complaint, China has said that these measures by India discriminate against goods of Chinese origin.
“These measures appear to be inconsistent with India’s obligations under the Subsidies and Countervailing Measures (SCM) Agreement, the GATT (General Agreement on Tariffs and Trade) 1994 and the TRIMs (Trade-Related Investment Measures) Agreement,” China has claimed.
Both India and China are members of the WTO. If a member country believes that a support measure under a policy or scheme of another country is harming its exports of certain goods, it can file a complaint under the dispute settlement mechanism of the WTO.
Seeking consultation is the first step of the dispute settlement process, as per WTO rules. If the consultations requested with India do not result in a satisfactory solution, the EU can request that the WTO set up a panel in the case to rule on the issue raised.
Beijing seeks to boost exports of its EVs to India. Considering the size and scope of India’s auto market, Chinese EV makers see it as a major source to expand sales.
China is apparently facing overcapacity with large production of EVs and declining domestic sales and profits amid price wars. Chinese hybrid car makers like BYD are looking for overseas markets, especially in the EU and Asia.
According to the data from China Passenger Car Association (CPCA), 50-odd EV builders of China exported a total of 2.01 million pure electric and plug-in hybrid vehicles overseas in the first eight months of the year, up 51 per cent from the same period a year earlier.
However, troubles started after the EU imposed a 27 per cent tariff on Chinese EVs to limit their sales in the bloc.
The Indian government has also taken a host of measures, such as the electric-vehicle policy and the production-linked incentive scheme, to boost domestic manufacturing of EVs. The government approved the PLI ACC scheme under the “National Programme on Advanced Chemistry Cell (ACC) Battery Storage” in May 2021, with an outlay of Rs 18,100 crore for 50 GWh capacity for five years after a gestation period of two years.
This scheme aims to enhance domestic cell production, reduce reliance on imports and lower the overall costs of cell manufacturing.
In September 2021, a PLI Scheme for Automobile and Auto Components with budgetary outlay of Rs 25,938 crore was approved by the Centre.
In March 2024, the Government approved a scheme to promote India as a manufacturing destination so that e-vehicles with the latest technology can be manufactured in the country. The policy is designed to attract investments in the e-vehicle space by reputed global EV manufacturers.