China moved a World Trade Organization dispute over India's electric-vehicle subsidy programs to the litigation stage in February 2026, requesting a panel to examine measures Beijing calls discriminatory against imported components.

The case, registered as DS642 — "India, Measures Concerning Trade in the Automotive and Renewable Energy Technology Sectors" — began in October 2025 when China formally requested consultations with New Delhi. By February 2026, China had asked the WTO to establish a panel, formally entering the case into the dispute settlement system's litigation phase.

Beijing argues that India's policies "discriminate against foreign goods" and favor locally produced components used in EVs, batteries, and auto parts.

What is China challenging?

India operates Production-Linked Incentive (PLI) programs covering electric vehicles, advanced chemistry cell batteries, automotive components, and renewable-energy technologies. China contends these schemes breach WTO non-discrimination rules by tying government support to domestic input use.

In its consultations request, China identified three specific grievances:

• Financial incentives contingent on the use of domestic goods
• Discrimination against imported auto components and battery materials
• Distorted international competition in EV and renewable-energy supply chains

Beijing claims Chinese-made components face disadvantage in India's expanding clean-energy market.

What is India's industrial-policy rationale?

New Delhi frames the PLI schemes as part of a strategy to build domestic manufacturing in next-generation technologies. The programs target sectors the government considers strategic for energy transition and technological sovereignty.

Officials argue local-content requirements are necessary to nurture nascent industries. India aims to reduce import dependence and position itself as a global clean-energy manufacturing hub.

Can WTO rules still enforce a ruling?

A structural weakness complicates enforcement. The WTO Appellate Body has been effectively non-functional since 2019, after the United States blocked appointments of new judges.

If India loses at the panel stage, it can file an appeal. With the Appellate Body paralyzed, that appeal has been described as "appealing into the void." A ruling would remain unresolved indefinitely, allowing governments to maintain contested policies for years.

This institutional gap has weakened the WTO's capacity to discipline industrial subsidies tied to local-content requirements at a moment when governments are expanding clean-energy support.

What does this mean for trade practitioners?

Practitioners advising on India market entry should monitor panel proceedings closely given the Appellate Body impasse. Companies in the EV and battery supply chains — particularly Chinese component exporters — face prolonged uncertainty over market access.

Counsel advising on PLI eligibility must weigh compliance risks against extended litigation timelines. Multinational clients may need to document sourcing strategies to defend against potential WTO findings, even when those findings carry no immediate enforceability.

Why does this dispute extend beyond India?

The case carries implications beyond the bilateral relationship. Indonesia, pursuing its own EV and battery manufacturing strategy, has promoted local processing of critical minerals, especially nickel, through export restrictions and domestic-processing incentives.

Panel decisions and ongoing disputes continue to shape global debates over industrial policy and supply chains, even with limited formal enforcement. Governments will keep weighing domestic industrial ambitions against trade-rule obligations as clean-energy supply chains expand.