In a stunning development, China has taken a bold step by filing a complaint with the World Trade Organization (WTO) against India, claiming that the Indian government's subsidies for electric vehicle (EV) and battery manufacturing are giving its domestic industries an unfair competitive edge. This dramatic move has sparked a heated debate about fair trade practices and global competition.

On October 15, 2025, the Chinese Commerce Ministry expressed concerns that India’s financial incentives were undermining China's national interests in international trade. They highlighted that these subsidies not only benefit Indian industries but also set the stage for a potential trade imbalance on a global scale. The ministry was quoted saying that China would take “firm measures” to protect its domestic market.

To understand the significance of this complaint, we must recognize that China dominates the global EV market, accounting for nearly two-thirds of sales worldwide. Recent data from Rho Motion shows that China sold approximately 1.3 million electric vehicles last year alone. This dominance is a critical backdrop to the complaint, as it underscores China's vulnerability to competitive threats from rapidly growing markets like India.

Interestingly, this complaint coincides with reports that India is planning to launch a National Critical Mineral Stockpile (NCMS) program. This initiative aims to secure a stable supply of rare earth elements essential for the production of electric vehicles and other green technologies, especially as China has recently restricted exports of these crucial materials. If successful, this program could bolster India's position in the EV sector and counterbalance China's market strength.

India's subsidy system, outlined by the NITI Aayog’s portal for electric vehicles, is designed to promote electric mobility. For instance, it offers substantial financial incentives on two-wheelers, three-wheelers, four-wheelers, and electric buses. These incentives can amount to a significant reduction in the overall cost of EVs, making them more accessible to consumers. The program aims to enhance the adoption and manufacturing of electric vehicles through the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME-II) initiative, which is currently in its three-year implementation phase.

As the world watches this unfolding situation, the question arises: Will this trade dispute escalate into a larger confrontation between two of Asia's largest economies? The stakes are high, and the implications extend far beyond national borders.