China Challenges India’s EV Subsidies at World Trade Organisation

China has officially filed a complaint against India at the World Trade Organisation (WTO), alleging that New Delhi’s electric vehicle (EV) and battery manufacturing subsidies give domestic companies an unfair advantage over global competitors. The dispute marks a new flashpoint in the fast-growing global EV industry. The use of WTO mechanisms by China, ironically seen as one of the biggest backers of subsidies for domestic industry will not be missed by anyone.

China’s Complaint and Its Concerns

According to reports, China’s Ministry of Commerce has warned that it will take “firm measures” to protect the rights of Chinese EV manufacturers. Beijing claims that India’s extensive incentive programmes - ranging from EV production subsidies to concessional tax benefits - distort the playing field for Chinese automakers considering entry into the Indian market.

The complaint comes at a time when India is planning to create a National Critical Mineral Stockpile (NCMS). The NCMS aims to secure long-term access to essential rare earth elements used in EV batteries, solar panels, and wind turbines. This initiative follows China’s recent restrictions on exporting key minerals, a move that has intensified global efforts to diversify supply chains away from Beijing.

Under WTO rules, India now has 30 days to enter consultations with China to resolve the issue. If both nations fail to reach an agreement, China can request the formation of a dispute settlement panel to adjudicate the case.

EV Overcapacity and China’s Expanding Push Abroad

China’s EV industry has developed rapidly over the past decade with strong state support, including subsidies, tax rebates, and consumer incentives. In a now familiar templete, domestic capacities have been bult to serve the global market, leading to serious overcapacity issues as countries have sought to block cheaper Chinese entrants. On top of that , as China's domestic market slows and production capacity outpaces demand, many Chinese automakers, such as BYD, face a massive challange without access to newer, significant markets. Interestingly, the recent report by AlixPartners noted that only 15 out of the 129 electric vehicle (EV) and plug-in hybrid brands currently operating in China are expected to remain financially viable by 2030.

India, with its vast consumer base and growing clean mobility ecosystem, presents an attractive opportunity. However, India’s increasing protection for domestic manufacturing and preference for local value addition have raised concerns for foreign firms attempting to compete on equal terms.

India’s Robust Push Toward Electric Mobility

India EV market is growing at unprecedented speed. In FY 2024–25, electric two‑wheeler sales reached 11.49  lakh units, up 21 percent from the previous year. This expansion is being built on the back of several government schemes designed to make India a hub for clean transportation and advanced battery manufacturing.

Government Incentives Driving Growth

FAME Phase-I & National Electric Mobility Mission Plan (NEMMP) 2020:

FAME India Scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) was implemented from 2015 to 2019 to encourage the adoption of electric and hybrid vehicles. Under the first phase of FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), more than 2.55 lakh EVs were supported, along with the development of essential charging infrastructure.

National Electric Mobility Mission Plan (NEMMP) 2020 was launched to accelerate EV production and adoption. 

FAME India Phase‑II:

Introduced in April 2019 with a budget of ₹11,500 crore, this scheme boosted EV adoption on a national scale. As of June 2025, 16.29 lakh vehicles have received support under FAME II. The programme also focused on strengthening India’s electric bus network and expanding fast‑charging facilities.

PLI Schemes for EVs and Batteries:

The Production Linked Incentive (PLI) Scheme for the automobile sector, worth ₹25,938 crore, incentivizes domestic manufacturing of Advanced Automotive Technologies (AAT). By March 2025, investments under this scheme exceeded ₹29,500 crore. Participation requires at least 50% domestic value addition to qualify for the incentives.

Another major initiative—the PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage—targets local manufacturing capacity of 50 GWh by leveraging ₹18,100 crore in investment support. As of February 2025, 40 GWh of projects have been awarded.

PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE):

Approved in September 2024 and implemented till March 2028 with ₹10,900 crore, this comprehensive scheme provides direct subsidies to consumers. As of July 2025:

• 24.79 lakh e‑two‑wheelers received ₹1,772 crore in incentives.

• 3.15 lakh e‑three‑wheelers received ₹907 crore.

• 5,643 e‑trucks and several e‑ambulances received a combined ₹1,000 crore support.

• 14,028 electric buses were supported with ₹4,391 crore in funding.

Scheme for Promotion of Manufacturing of Electric Passenger Cars (SPMEPCI):

Launched in March 2024, this scheme blends consumer incentives with localization targets, complementing India’s central initiatives such as ‘Make in India’ and ‘Aatmanirbhar Bharat’.

PM‑eBus Sewa Scheme:

Introduced in August 2023 with a budget of ₹20,000 crore, this plan aims to deploy 10,000 electric buses under a Public‑Private Partnership (PPP) model, helping modernize urban transport.