China has lodged a formal complaint against India at the World Trade Organisation (WTO), accusing New Delhi of offering unfair subsidies to domestic manufacturers of electric vehicles (EVs) and batteries. Beijing claims that India’s incentive schemes provide an unfair advantage to local companies while discriminating against foreign competitors. The complaint, filed on October 15, 2025, adds a new layer of tension to already strained trade relations between the two Asian powers, and could mark the beginning of a long and complicated dispute under global trade rules.
According to China’s Ministry of Commerce, India’s measures in the EV and battery manufacturing sectors violate WTO principles that promote fair competition and non-discriminatory practices among member states. The ministry said the Indian government’s subsidy structure has created an uneven playing field in favour of domestic industries, particularly through direct incentives and indirect benefits under programmes such as the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME). Beijing also accused India of undermining its own industries’ market access and harming China’s trade interests.
China’s complaint is the first formal step in the WTO’s dispute settlement process. By requesting consultations with India, Beijing has opened a 60-day window for both sides to negotiate and attempt to reach a resolution. If consultations fail, China can request that the WTO establish a dispute panel to examine the matter and issue a ruling. Chinese officials have also filed similar complaints against Turkiye, Canada, and the European Union, alleging that these countries have imposed policies that distort the global electric vehicle market and favour their domestic producers.
The Indian government has confirmed that it has received the WTO complaint. Commerce Secretary Rajesh Agrawal said New Delhi will review the detailed submissions and respond in accordance with WTO procedures. He added that the government remains confident that India’s policies are consistent with international trade rules and are aimed at promoting sustainable growth in the domestic EV industry. A senior official said India would “engage constructively” during consultations but would defend its right to support green technology development and reduce dependence on imported fuels.
The dispute comes at a time when India is aggressively pushing its electric mobility programme. Through the FAME-II scheme and other incentive-based measures, the government aims to boost local manufacturing of electric vehicles, batteries, and related components. These initiatives are part of India’s broader strategy to cut carbon emissions, reduce oil imports, and make the country a global hub for clean technology production. The subsidies are designed to encourage both local players and international companies that set up manufacturing facilities in India.
As per NITI Aayog’s data, India currently provides direct financial incentives based on battery capacity. For electric two-wheelers, the subsidy is ₹15,000 per kilowatt-hour, covering up to 40 percent of the vehicle’s total cost. For three-wheelers, the subsidy stands at ₹10,000 per kilowatt-hour for a typical 5 kWh battery. Electric cars receive a subsidy of ₹10,000 per kilowatt-hour for around a 15 kWh battery size, while electric buses receive the highest subsidy of ₹20,000 per kilowatt-hour, usually for 250 kWh battery packs.
These measures, China argues, create an unfair environment for foreign manufacturers who export EVs or components to India. Beijing claims that by linking incentives to local content and manufacturing, India is effectively violating WTO rules on trade-related investment measures, which prohibit favouring domestic goods over imported ones. The Chinese Ministry of Commerce also accused India of using trade barriers and indirect restrictions that make it difficult for Chinese companies to compete in the Indian market.
The timing of China’s complaint is notable. It comes just weeks after reports that India is planning to launch a National Critical Mineral Stockpile (NCMS) programme. The initiative aims to secure supplies of essential rare earth elements used in EV batteries, wind turbines, and other green technologies. The move is part of India’s broader plan to reduce reliance on imports of critical minerals, an area where China currently dominates global supply chains. Beijing’s decision to restrict exports of several key rare earth elements earlier this year has already disrupted international markets. Many analysts see China’s WTO complaint as a response to India’s attempts to secure its own mineral independence.
China’s Ministry of Commerce has said it will take “firm measures” to protect the interests of its domestic industries and ensure fair competition in international trade. The statement added that China remains committed to the principles of the multilateral trading system but will not tolerate practices that, in its view, distort global markets.
India and China have a long history of trade friction, and this latest complaint could further strain their economic relationship. According to India’s Ministry of Commerce data, China remains India’s second-largest trading partner, but the balance is heavily tilted in Beijing’s favour. In the financial year 2024–25, India’s exports to China fell by 14.5 percent to USD 14.25 billion, while imports from China rose by 11.5 percent to USD 113.45 billion. As a result, India’s trade deficit with China widened to USD 99.2 billion, up from USD 85.1 billion in the previous year.
The two countries have been involved in multiple trade disputes in recent years. India has imposed anti-dumping duties on several Chinese goods, including chemicals, steel products, and electronic components, to protect domestic industries. China, in turn, has accused India of using regulatory barriers to limit Chinese investments and imports. The geopolitical tension between the two neighbours, worsened by border clashes and strategic competition in Asia, has also influenced their trade relations.
Beijing’s WTO complaint adds another layer of complexity to India’s economic policies, which have focused on reducing dependence on imports and strengthening domestic manufacturing under the “Make in India” and “Atmanirbhar Bharat” initiatives. These programmes aim to attract foreign investment while encouraging local production, especially in critical sectors like electric mobility and renewable energy. Experts say that while India’s policies are aimed at promoting sustainability and industrial growth, they must be designed carefully to remain consistent with WTO rules.
China’s dominance in the global EV market makes the issue even more sensitive. According to data from research firm Rho Motion, China accounts for nearly two-thirds of all global EV sales, contributing about 1.3 million units. Chinese manufacturers such as BYD, NIO, and SAIC are major players in the international market, and the country also controls most of the world’s battery production capacity. By challenging India’s subsidies, Beijing may be trying to defend its position in global trade discussions and signal that it will resist protectionist policies by other nations.
Trade experts believe that the WTO case could take months, or even years, to reach a conclusion. If consultations fail and a dispute panel is established, the proceedings will involve detailed legal arguments and economic assessments of India’s subsidy structures. A ruling against India could force the government to modify its incentive programmes, though such outcomes often take years to enforce and are subject to appeal.
Indian officials, however, maintain that the country’s EV policies are in line with global climate goals and do not discriminate against foreign companies. They argue that the FAME scheme and related incentives are open to any company that invests in India and contributes to local manufacturing. Several international automakers, including Hyundai, Kia, and Tesla, have expressed interest in setting up electric vehicle plants in India under the government’s new policy framework.
