- China has lodged a complaint with the World Trade Organization, against India, saying that some of India’s incentives for domestic clean technologies discriminate against imports, inconsistent with trade agreements.
- China has previously raised similar concerns about renewable energy subsidies or tariffs in other countries, amid growing competition among major economies to dominate the renewable energy sector.
- Experts highlight that the complaint reflects a broader dispute over trade rules and global governance, as multiple countries seek to reduce reliance on China and protect domestic industries.
China has approached the World Trade Organization (WTO), alleging that India’s renewable energy incentives under the ‘Make in India’ initiative discriminate against foreign goods, particularly those of Chinese origin.
According to a WTO communication circulated to members on October 20, China has requested consultations with India over these measures that it alleges are affecting trade. Consultations allow parties to discuss the matter and seek a resolution. If the issue remains unresolved after 60 days, the complainant may request the establishment of a dispute panel.
China’s complaint lists three programmes under the ‘Make in India’ initiative — the Production Linked Incentive (PLI) schemes for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, and the automobile and auto components industry, as well as the scheme to promote manufacturing of electric passenger cars in India (EV Passenger Cars Scheme). The three schemes are designed to promote domestic manufacturing of key components in the renewable energy and automotive sectors.
The PLI scheme, launched in 2020, aims to strengthen India’s manufacturing capabilities by offering financial incentives to eligible companies based on their incremental sales. Initially covering three sectors, it has since expanded to 14, including electronics, clean technology, steel, textiles, and automobiles. So far, it has attracted investments worth ₹1.76 trillion across these sectors, according to a statement by the government earlier this year. The total sales by PLI beneficiaries have crossed ₹16.5 trillion as of mid-2025.
Shantanu Singh, a Public International Law lawyer, says the PLI scheme, at the centre of the recent dispute, has been in place for several years. While other countries have previously raised questions about it at the WTO, China is the first to turn it into a full-fledged dispute by seeking consultations over three specific policy measures.
Ajay Srivastava, former Indian Trade Service officer and founder of the Global Trade Research Initiative (GTRI), says China continues to dominate the global value chain for EVs, lithium-ion batteries, and related products. “Even as India begins to have some local value addition, 60-80% of imports in these sectors still come from China,” he notes. “The PLI scheme merely supports some local value addition — core inputs like lithium cells and EV motors will keep coming from China for at least another decade.”
An increasing trend
In the past few years, China has raised similar concerns against several countries and trade blocs over policies supporting the electric vehicle and renewable energy sectors.
In March 2024, China sought consultations with the United States at the WTO, objecting to provisions under the Inflation Reduction Act (IRA). It said that the climate-related subsidies offered to the clean vehicle and energy sectors under the Act favour domestic products over imported ones and discriminate against goods of Chinese origin, in violation of certain WTO agreements. The IRA, passed in 2022, provides tax credits to boost the production of electric vehicles, batteries, and renewable energy equipment.
A few months later, in August 2024, China approached the WTO again, against the European Union after the EU launched an anti-subsidy investigation into Chinese-made battery electric vehicles (BEVs). Beijing described the probe as “protectionist in nature.” Around the same period, China also expressed concerns about Turkey’s import permits and additional duties on electric vehicles coming from Chinese manufacturers.
When asked about the increasing trend of trade conflict in the renewable energy or clean technology sector, Ming Du, a professor of transnational law at Durham University, U.K., says, “Clean tech is not only about achieving climate objectives; it is also a future-defining strategic sector that major countries compete to dominate.” He explains that, concurrently, there is a worldwide rise in industrial policy, emphasising the role of governments in supporting strategic sectors such as clean energy. For example, the U.S.A. IRA, the EU’s Green Deal, and China’s Made in China 2025 initiative all promote the growth of domestic clean technology sectors. While such industrial policies aim to boost domestic capacity, they often risk breaching WTO rules by discriminating against foreign goods or offering prohibited subsidies. As a result, trade disputes arise.
China’s current complaint against India’s PLI scheme reflects this wider pattern. The U.S. and Brazil have also raised concerns in 2021, around India’s PLI framework but in different sectors.
Singh notes that the legal claims raised by China against India in this consultation request resemble those made by the United States in the India–Solar Cells case (2014). That case, too, involved Indian policies designed to support the renewable energy sector. India lost the case in 2016 and eventually reached a mutually agreed settlement with the U.S.A. in 2023.
“The important point,” Singh says, “is that China’s challenge is not about the act of giving subsidies per se — it is about how they are designed. When a subsidy is structured in a way that requires the use of domestically manufactured products over imported ones, it risks falling foul of the prohibition on such subsidies under WTO rules. China is questioning the design of the subsidy given under the challenged PLI measure, which is linked to domestic value addition.”
Srivastava rejects the claim that India’s PLI scheme violates the WTO rules. “The PLI is open to both domestic and multinational firms that manufacture in India. The incentive is linked to production, not ownership,” he emphasises.
Trade and tensions
A Nature Springer study published in January 2025 explored the implications of China’s growing dominance in the renewable energy sector. It says that China’s massive clean-tech production is pushing down global prices for solar panels, wind turbines, and EVs, helping accelerate the global green transition.
The study details the scale of China’s control: it accounts for more than half of the world’s electric vehicle stock and held a 79% share of global EV lithium-ion battery manufacturing in 2021.
China also leads global supply chains for key energy transition minerals, controlling 99% of battery-grade graphite, 80% of refined magnet rare earths, 70% of refined cobalt, 60% of lithium chemicals, and 40% of refined copper. In 2022, it invested $546 billion in clean energy, nearly four times the U.S.A. investment that year.
However, China’s dominance in renewable energy supply chains from critical minerals to manufacturing assembly lines presents economic and security challenges for its trading partners, it says.
Experts question the way China has built an edge in these critical sectors. “What China did over the last 30 years, the U.S.A., India, Australia, and Europe are now trying to do — though at a smaller scale,” Srivastava says.
The paper also observed that despite decades of market reforms and WTO membership, China’s economic system continues to blend state control with market mechanisms, allowing the government to guide strategic sectors through ownership, regulation, and administrative direction.
Du, one of the authors of this paper, says China’s industrial policy functions like a corporate strategy — tightly planned and enforced — leaving little room for market deviation. In contrast, the industrial policies of other countries are primarily guidelines. While China’s policies themselves rarely breach WTO rules outright, the challenge, he explains, lies in how they are embedded within China’s political–economic model. Having secured dominance, China has since rolled back several earlier subsidies.
Srivastava adds, “After investing heavily to dominate clean-tech supply chains, Beijing now faces countries building alternatives post-COVID. The U.S.A. IRA and similar local-content programs are a response to that. China’s protests ring hollow as it continues to offer massive subsidies to strategic sectors to retain monopoly control.”
Experts also raise concerns about the WTO’s capacity to handle emerging challenges. Srivastava is blunt: “The WTO once worked well for tariffs and disputes. Now it’s overloaded with non-core issues and can’t keep up with new-age trade challenges.”
Du agrees, noting that trade has become increasingly intertwined with climate change, clean technology, industrial policy, and national security issues — areas where the WTO’s decades-old framework appears outdated. “The WTO’s playbook was written decades ago, and many of today’s challenges were not foreseen. Now, with its dispute settlement mechanism paralysed and the Appellate Body defunct,” he says, adding, “The WTO is being sidelined as the global trading system becomes more fragmented.”
Banner image: Workers assemble a car at an electric vehicle plant in Thoothukudi, Tamil Nadu. (AP Photo/ Rafiq Maqbool).
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