Thu Oct 30 03:00:00 UTC 2025: News Article:

China Files WTO Complaint Against India’s Production-Linked Incentive (PLI) Schemes

New Delhi – October 30, 2025 – China has formally lodged a complaint with the World Trade Organization (WTO) against India’s Production-Linked Incentive (PLI) schemes. China alleges that the schemes, designed to boost domestic manufacturing in the advanced chemistry cell (ACC) battery, automotive, and electric vehicle (EV) sectors, violate WTO trade regulations by providing subsidies contingent on the use of domestic goods.

India’s PLI scheme, launched in 2020, offers financial incentives to companies based on incremental sales, aiming to integrate domestic industries into global value chains. However, China argues that the “Domestic Value Addition” (DVA) requirements within the PLI schemes favor Indian-made products over imported goods, unfairly discriminating against Chinese exports. For example, PLI schemes for auto and ACC batteries need to ensure a DVA of 50% and 25%, respectively.

The core of China’s complaint revolves around the WTO’s Subsidies and Countervailing Measures (SCM) agreement, which prohibits “Import Substitution (IS) subsidies” that favor domestic over foreign goods. China argues that the PLI schemes constitute such IS subsidies, violating the national treatment obligation under GATT (General Agreement on Tariffs and Trade) and the TRIMs (Trade Related Investment Measures) Agreement.

While India asserts that DVA can be achieved in various ways beyond simply using domestic goods, the dispute has now entered the WTO’s consultation phase. Both countries will attempt to resolve the issue amicably. If consultations fail, the matter will proceed to adjudication by a WTO panel. However, the current incapacitation of the WTO’s Appellate Body means that any appeal of the panel’s decision could indefinitely postpone resolution, allowing the status quo to continue.

The case highlights the delicate balance between a nation’s right to promote domestic industry and its obligations to maintain fair international trade practices under WTO rules. The outcome of this dispute could have significant implications for India’s industrial policy and its trade relations with China and the rest of the world.

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