Despite the World Trade Organization (WTO) setting up a panel to examine India’s production-linked incentive (PLI) schemes for batteries, electric vehicles and related sectors, following a request by China, India is unlikely to face any legal consequences. Due to the absence of any functional appellate body at the WTO, there are no ways India can face any penalties or any other legal consequences.
“WTO disputes have no legal implications as the appellate body is now broken. However, there could be political implications, if the partner country of India is not happy. But there won’t be any economic impact,” said Biswajit Dhar, trade expert and former Director General of the Research and Information Systems for Developing Countries (RIS), Ministry of External Affairs.
Experts further argued that India has never promoted its PLI scheme as an export subsidy; rather it is more of a manufacturing aid. So, technically, India can’t be criticised for not creating a level playing field in terms of exports.
Also, global players are unlikely to criticize India’s measures as even foreign companies like Foxconn and Samsung get equal benefits from the schemes. So, this move by China is unlikely to tarnish India’s image and affect its trade relation, say experts.
“The PLI scheme is non-discriminatory and fully compliant with WTO norms. Global firms such as Foxconn, Apple suppliers and Samsung have all set up manufacturing bases in India and are benefiting under it. The incentives are linked to incremental sales and fresh investment, not exports, which strengthens India’s position. While the scheme could be challenged on specific technical grounds, it will not be easy for China to establish a violation,” said Jayant Dasgupta, former Indian ambassador to the WTO.
China has challenged India’s production-linked incentive (PLI) schemes for advanced chemistry cell batteries, automobiles and auto components, and electric vehicles at the WTO, alleging that they discriminate against foreign firms. Beijing argues the measures breach core WTO principles, including national treatment rules and the ban on import substitution subsidies, and unfairly tilt the competitive landscape in favour of domestic manufacturers.
China filed a formal complaint with the WTO against India's electric vehicle (EV) and battery manufacturing subsidies on October 15, 2025. Beijing alleged that India's PLI schemes and other local manufacturing measures violate international trade rules by creating unfair advantages for domestic producers. India confirmed that it has participated in consultations and furnished detailed responses to show that its measures are consistent with WTO obligations. The government is confident the schemes are fully compliant with global trade rules.