China has lodged a formal complaint with the World Trade Organization (WTO) regarding India’s electric vehicle (EV) subsidy program, alleging that the incentives discriminate against Chinese goods, according to a communication released by the Geneva-based body on October 20, 2025. Beijing is challenging three of India’s production-linked incentives (PLIs), asserting they favor domestic products over imports.
The dispute arises as India seeks to cultivate its own EV industry while simultaneously navigating its reliance on China for crucial components. China, the world’s largest EV producer, is facing challenges in finding new markets as Western nations impose higher tariffs on Chinese imports. India’s growing EV market represents a significant opportunity for Chinese manufacturers, but New Delhi is attempting to foster domestic production through its PLI schemes.
The first two PLI schemes, introduced in 2021, target manufacturers of EV batteries, components and original equipment. A third, launched in March 2024, reduces import duties on fully built passenger EVs priced above $35,000, capping imports at 80,000 units annually. This scheme is designed to attract automakers like Tesla, while effectively excluding Chinese companies.
India’s approach reflects a selective strategy, balancing the require for Chinese expertise and components with the ambition to build a self-reliant EV sector. Despite the desire for domestic growth, India acknowledges its dependence on China, allowing for strategic partnerships while restricting certain investments. Currently, only approximately 13% of EV models sold in India qualify for government incentives, largely due to the high proportion of imported components, primarily from China, according to a report from November 2025.
The PLI scheme requires automakers to achieve at least 50% domestic value addition, or 40% excluding battery cells, to be eligible for benefits. Only models from Tata Motors and Mahindra have currently met these requirements. Several other manufacturers, including JSW MG, BMW, Mercedes-Benz, Hyundai, Kia, Citroën, VinFast, Volvo, Tesla, and Audi, have been found to rely on over 60% imported components.
In 2023-24, India sold 1.9 million EVs, representing 7.46% of total automobile sales. JSW MG Motor, a joint venture between China’s SAIC Motor and India’s JSW Group, recently announced plans to invest up to $440 million to expand its India factory and launch new hybrid and electric vehicles, further illustrating the complex interplay between the two nations in the EV sector. The MG Windsor, produced by JSW MG, was India’s best-selling passenger EV in the previous year.
The WTO has not yet scheduled a hearing to address China’s complaint. The Indian government has not publicly responded to the WTO filing as of February 17, 2026.
