India Blocks China’s WTO Panel Bid Over PLI Schemes for Auto, Battery and EV Sectors

India has blocked China’s request to establish a dispute settlement panel at the World Trade Organisation (WTO) over New Delhi’s incentive schemes covering automobiles, advanced chemistry cell batteries and electric vehicles (EV).

The move comes after China earlier this month sought the formation of a WTO dispute panel, arguing that bilateral consultations with India had failed to resolve the matter.

Background to the Dispute

In October last year, China alleged that certain conditions embedded in India’s Production Linked Incentive (PLI) schemes for automobiles and advanced chemistry cell batteries, as well as policies promoting electric vehicle manufacturing, violate global trade rules. Beijing claimed these measures discriminate against Chinese goods and are inconsistent with WTO norms.

According to a communication submitted to the WTO, consultations between the two sides were held on November 25, 2025, and January 6, 2026, to reach a mutually agreed solution. China stated that these discussions did not lead to a resolution of the dispute.

India Blocks Panel at WTO Meeting

At a meeting of the WTO’s Dispute Settlement Body (DSB), India formally blocked China’s request for the establishment of a dispute panel related to what Beijing describes as Indian measures in the automotive and renewable energy sectors.

Under WTO procedures, a complainant is allowed to renew its request for a dispute panel at the subsequent DSB meeting. As per established norms, a panel can typically be set up at the second request stage if the matter remains unresolved.

Both India and China are members of the WTO and have previously engaged in multiple trade disputes under its framework. Member countries can invoke the dispute settlement mechanism if they believe another member’s policy support measures are harming their exports.

India–China Trade Context

China continues to be India’s second-largest trading partner, even as the bilateral trade imbalance remains pronounced. According to annual trade data released by Chinese customs authorities, India’s exports to China rose by USD 5.5 billion over the previous year, bucking a longer-term declining trend, while the trade deficit touched a record USD 116.12 billion.

Bilateral trade reached an all-time high of USD 155.62 billion in 2025. Indian exports to China, which have historically struggled to gain momentum, increased 9.7 percent year-on-year to USD 19.75 billion during the January–December period. Over the same period, Chinese exports to India grew at a faster pace, rising 12.8 percent to USD 135.87 billion.

The divergence in export growth has kept the trade gap elevated. India’s trade deficit with China stood at USD 99.2 billion in 2024–25, underscoring the structural imbalance in the relationship despite recent gains in Indian exports.

Against this backdrop, the WTO dispute adds further complexity to India–China trade ties, particularly as New Delhi intensifies efforts to build domestic manufacturing capacity in strategic sectors such as electric mobility, advanced batteries, and energy storage.