India Says Auto And Renewable Energy Support Measures Follow WTO Rules

The World Trade Organisation’s (WTO) dispute settlement body has agreed to set up a panel to examine India’s Production Linked Incentive (PLI) schemes covering batteries, electric vehicles, renewable energy and related sectors, following a request by China.

The move adds a fresh dimension to ongoing trade differences between the two countries over policy support extended to the automotive and renewable energy industries.

China remains India’s second-largest trading partner, with trade flows between the two countries showing a widening imbalance in recent years. India’s exports to China declined during the last fiscal year, while imports continued to rise, leading to a larger trade deficit.

What Triggered The WTO Review?

At its 24 February meeting, the Dispute Settlement Body agreed to set up a panel in the case titled India – Measures Concerning Trade in the Automotive and Renewable Energy Technology Sectors (DS642) after China filed a second request. India had earlier exercised its right to block the first request during the 27 January session, in line with WTO procedures.

China has raised concerns about India’s incentive programmes for the following industries:

1. Advanced chemistry cell batteries
   
2. Automobiles
   
3. Auto components
   
4. Electric vehicles
   

Arguing that certain provisions may favour domestic manufacturers and may be inconsistent with WTO principles on national treatment and import substitution subsidies. Beijing has said the measures may influence competitive conditions and trade flows in these sectors.

What Is India’s reply?

India said it was disappointed with China’s decision to push for the formation of a panel, despite what it described as extensive and constructive bilateral discussions in which detailed explanations of the measures were shared.

India reiterated that the measures in question comply with its commitments under WTO agreements, including the General Agreement on Tariffs and Trade (GATT), 1994, and the Agreement on Subsidies and Countervailing Measures.

The government said it will engage fully in the panel process and strongly defend its position, expressing confidence that the review will uphold the consistency of the measures with WTO rules.

What Are Other WTO Members Saying?

The United States, appearing as a third party, expressed concern over China’s decision to move ahead with the dispute and called on Beijing to address issues related to non-market policies and excess industrial capacity, which it said have negatively impacted global supply chains.

Canada, the European Union, Japan, the United Kingdom and the United States have reserved their rights to participate as third parties in the proceedings.

The European Union also said the case highlights the need for a functional appellate review system within the WTO.

The next regular meeting of the WTO's dispute settlement body is scheduled for 21 April.

What Should Stock Market Investors Watch?

Investors may keep an eye on auto, EV and battery-related stocks, as policy clarity around incentive schemes could influence sector sentiment. Any escalation in trade tensions may also affect supply chains and near term market outlook.

Source:

Moneycontrol
The New Indian Express
ET