China Challenges India’s EV Subsidies At WTO, Alleges Unfair Advantage For Domestic Firms

China has reportedly filed a complaint against India at the World Trade Organisation (WTO) over the latter’s electric vehicle (EV) and battery subsidy policies in the interest of its EV exports. 

As per a report by Reuters, Beijing’s commerce ministry has accused India of offering “import substitution subsidies” designed to replace imports with locally produced goods. It argued that schemes such as FAME II and the PLI programme distort fair competition by incentivising firms that meet high local-content requirements, effectively locking out overseas manufacturers. 

China has warned it will take “firm measures” to safeguard its EV industry’s interests if the issue remains unresolved.​

India’s EV policy, central to its ‘Atmanirbhar Bharat’ and ‘Make in India’ push, aims to build a self-reliant clean mobility ecosystem and reduce dependence on imports. The government has rolled out multiple incentive schemes to encourage manufacturing of EVs, batteries, and other advanced automotive technologies. These include the INR 25,938 Cr PLI scheme and the FAME India programme, which have together supported the deployment of over 16 Lakh EVs as of mid-2025.​

Under WTO procedures, the complaint triggers a 30-day consultation period in which both countries must attempt to reach a resolution. If no agreement is reached, China can request the formation of a dispute settlement panel to adjudicate the case. 

The move adds new friction to India-China trade relations, already marked by a record $99 Bn trade deficit in FY25, and underscores rising global tensions over clean-energy subsidies as nations rush to capture the fast-expanding EV market.

One of the most critical points in this friction was China’s restriction on rare earth magnet exports earlier this year, which affected Indian EV makers production capacity. Some companies expressed concerns over how the ban could lead to a decline in their sales. 

Amid all these, India recorded a total EV registration across categories of 1.74 Lakh in September as against 1.97 Lakh last month. Bajaj Auto’s Rajiv Bajaj’s in August said that the company was considering the possibility of zero sales in August due to the rare earth magnet supply issue, which significantly impacted its operations.

To address the challenges, the Indian government has launched a comprehensive initiative to secure rare earth elements critical for green technologies, including EVs and wind turbines. 

Central to this effort is the National Critical Mineral Stockpile program, aimed at building a two-month reserve of rare earths to mitigate supply chain disruptions following China’s export curbs. Complementing this is a INR 7,300 Cr incentive scheme to develop a full domestic rare earth magnet manufacturing ecosystem, targeting an annual production capacity of 6,000 tonnes. 

These efforts are part of a broader National Critical Minerals Mission that also includes boosting recycling and exploration to reduce import dependence and strengthen India’s strategic autonomy in clean energy materials.

As of now, the country’s EV market is poised to become a $132 Bn opportunity by 2030. 

With the massive opportunity in the EV industry, Indian EV makers are diversifying their offerings within the space to grow revenue streams. Bhavish Aggarwal-led Ola Electric today unveiled its first residential battery energy storage system (BESS) solution, Ola Shakti. 

The company said Ola Shakti will use its proprietary 4680 Bharat Cell battery technology platform produced at its Gigafactory in Tamil Nadu to provide energy solutions for homes, small businesses, and enterprises.