In October last year, Beijing alleged that certain conditions in India’s Production Linked Incentive schemes for advanced chemistry cell batteries, automobiles, and the policy to promote the manufacturing of electric vehicles violated global trade rules by discriminating against Chinese goods.
On Tuesday, Beijing alleged that India’s incentive schemes unfairly discriminate against foreign businesses and restrict trade, thereby violating WTO rules while New Delhi insisted that it participated in consultations with China in good faith and provided detailed explanations to show that its measures comply with WTO obligations.
India had blocked the first request for a panel by China at a Dispute Settlement Body (DSB) meeting on January 27. The two sides engaged in consultations but Beijing again requested for a panel on Tuesday. As per WTO rules, the panel will be established.
“India expressed disappointment with China’s insistence on a panel and said that it had explained in detail to Beijing that its measures were in line with its WTO obligations,” said an official.
China has claimed that these constituted subsidies within the Subsidies and Countervailing Measures Agreement, General Agreement on Tariffs and Trade and the Trade-Related Investment Measures Agreement of the WTO.
Incentives provided by India under each of the three programmes are conditioned upon compliance with certain requirements, including domestic value added requirements, China said. Among other things, these requirements link the eligibility for incentives, and, in some instances, the amount awarded, to the use of domestic over imported goods, it alleged.
On Tuesday, the US, a third party, expressed disappointment over China’s decision to proceed with the panel request. and asked it to address its own non-market policies and excess capacity as these policies harm global supply chains.