Geneva, February 24, 2026 – China has submitted its second request for the establishment of a dispute settlement panel at the World Trade Organization (WTO) to rule on India’s incentive schemes in the automotive and renewable energy sectors, escalating a trade dispute between the two Asian giants.
The request targets India’s incentive measures for the production of advanced chemistry cell (ACC) batteries, automobiles, auto components, and electric vehicles (EVs). China argues that these schemes unfairly discriminate against foreign companies, restrict international trade, and violate key WTO principles, including national treatment and the prohibition of import substitution subsidies.
China said India’s policies provide preferential treatment to domestic manufacturers, effectively sidelining overseas firms and distorting competition in fast-growing sectors such as clean energy and electric mobility. Beijing maintains that the measures breach WTO rules and undermine fair trade practices.
India, however, expressed regret over China’s decision to seek a panel ruling. New Delhi said it had engaged in consultations with China in good faith and provided detailed explanations demonstrating that its policies comply with WTO obligations. India added that it remains confident its incentive programs are fully compatible with global trade rules and are designed to support sustainable industrial development.
The dispute had earlier stalled after India declined to accept China’s first request for a panel during a Dispute Settlement Body (DSB) meeting on January 27. However, following China’s renewed appeal, the DSB agreed to establish the panel, formally launching the adjudication process.
The United States, participating as a third party, voiced disappointment over China’s move to proceed with the panel request. Washington urged Beijing to address its own non-market economic policies and excess industrial capacity, arguing that such practices continue to disrupt global supply chains and international trade.
Several WTO members have reserved their third-party rights to participate in the proceedings, including Canada, Colombia, the European Union, Indonesia, Japan, South Korea, Norway, Russia, Singapore, Thailand, Türkiye, the United Kingdom, and the United States.
The case is expected to have significant implications for global trade, particularly in the rapidly expanding sectors of electric vehicles, renewable energy, and advanced battery manufacturing, as countries increasingly deploy industrial policies to boost domestic production and reduce reliance on imports.