Beijing challenges India’s solar, telecom and EV incentive policies at the WTO, alleging violations of global trade rules and unfair advantages to domestic manufacturers
New Delhi (Economy India): China has once again escalated trade tensions with India at the World Trade Organization (WTO), filing its second formal complaint in 2025, alleging that India’s tariff structure on ICT products and subsidy policies for the solar and electric vehicle (EV) sectors unfairly disadvantage Chinese companies.
In a statement issued on Friday, China’s Ministry of Commerce claimed that India’s trade and industrial policies violate core WTO principles, including national treatment and prohibitions on import-substitution subsidies, and urged New Delhi to bring its measures in line with multilateral trade commitments.
Second WTO Case in a Single Year
This is the second WTO dispute initiated by China against India this year. In October 2025, Beijing had challenged India’s EV and battery subsidy regime, arguing that it provided disproportionate advantages to domestic manufacturers at the expense of foreign players, particularly Chinese firms with a strong global presence in electric mobility and battery supply chains.
The fresh complaint broadens the scope of China’s objections to include:
- Tariffs on telecom and ICT equipment
- Subsidies for India’s solar manufacturing ecosystem
- Policy-linked incentives favouring domestic firms
China’s Core Allegations
According to China’s Ministry of Commerce, India’s policies:
- Provide preferential treatment to domestic manufacturers
- Create unfair competitive conditions for imported Chinese products
- Violate WTO’s National Treatment Principle, which requires imported goods to be treated on par with domestic products
- Encourage import substitution, which is explicitly restricted under WTO subsidy rules
Beijing has called on India to “immediately rectify these practices” and adhere to its WTO commitments.
Solar Subsidies Under the Scanner
China’s complaint places particular emphasis on India’s solar manufacturing support policies, including:
- Production-linked incentives (PLI)
- Domestic content requirements
- Tariff barriers on imported solar modules and cells
China, which dominates the global solar supply chain, argues that these measures reduce market access for Chinese solar products in India—one of the world’s fastest-growing renewable energy markets.
India, however, has consistently defended its solar policies as necessary to:
- Reduce overdependence on imports
- Strengthen energy security
- Build resilient domestic manufacturing capacity
- Meet climate commitments without supply-chain vulnerabilities
Telecom and ICT Tariffs Also Challenged
China has also objected to India’s tariff regime on telecom and ICT equipment, claiming it disproportionately affects Chinese exporters.
Chinese firms are major global suppliers of:
- Networking equipment
- Telecom hardware
- ICT components
Beijing alleges that India’s tariff measures raise costs for Chinese products while providing implicit protection to Indian and non-Chinese manufacturers.
EV Subsidies: A Key Flashpoint
China has been particularly vocal about India’s electric vehicle (EV) incentive structure, which it argues gives Indian manufacturers an unfair edge.
China’s Claims:
- Heavy subsidies distort market competition
- Domestic firms receive preferential treatment
- Imported EVs and components face structural disadvantages
China’s commerce ministry has warned that it will take “all necessary steps” to protect the interests of its EV and battery industries.
India Among Top EV Subsidy Providers Globally
According to media reports, including analysis cited by The Economic Times, India ranks among the highest EV subsidy providers globally when incentives across the value chain are combined.
For instance:
- India’s best-selling EV, the Tata Nexon EV, reportedly receives cumulative incentives—direct and indirect—amounting to up to 46% of the vehicle’s effective cost
- Benefits include:
- Lower GST rates on EVs
- Reduced or zero road tax in several states
- Central government incentives under FAME and PLI schemes
These measures are designed to accelerate EV adoption, reduce oil imports, and support India’s climate goals.
India’s Likely Defence at the WTO
Trade experts note that India is expected to defend its policies by arguing that:
- Subsidies are non-discriminatory and policy-driven
- Measures fall under permissible industrial development objectives
- Support is aligned with environmental and climate goals
- WTO rules allow flexibility for developing economies pursuing sustainable development
India has previously maintained that its incentive frameworks are technology-neutral, transparent, and compliant with multilateral trade norms.
Broader Context: Trade, Technology and Geopolitics
The WTO disputes come against the backdrop of:
- A widening India–China trade deficit
- Growing strategic competition in technology and clean energy
- Global efforts to de-risk supply chains
- Intensifying subsidy races in renewables and EVs worldwide
Notably, several major economies—including the US and EU—also deploy aggressive subsidy regimes for clean energy and EV manufacturing, often invoking national security and climate imperatives.
What Happens Next at the WTO?
The dispute resolution process at the WTO typically involves:
- Consultations between the two countries
- Formation of a dispute settlement panel if consultations fail
- Panel findings and possible appeals
Given the WTO Appellate Body’s current limitations, experts say resolution timelines could be extended.
Implications for India’s Industrial Policy
While the complaint may increase legal scrutiny, analysts believe it is unlikely to derail India’s clean energy and manufacturing push.
Instead, it highlights the growing friction between:
- Trade liberalisation commitments
- Strategic industrial policy
- Climate transition goals
For India, balancing WTO obligations with domestic manufacturing priorities will remain a critical policy challenge.
China’s second WTO complaint in 2025 underscores intensifying trade and policy frictions between Asia’s two largest economies, particularly in future-facing sectors such as renewable energy, EVs and technology manufacturing.
As India accelerates its transition toward clean energy and self-reliant manufacturing, such disputes may become more frequent. The outcome of these WTO cases will not only shape bilateral trade relations but could also influence how developing economies navigate industrial policy within global trade rules.
Economy India will continue to track developments in this case and their implications for India’s trade policy, manufacturing ambitions and global economic positioning.
(Economy India)
