What is China’s complaint against India at WTO?, Pg8

Key Highlights:

• China has filed a complaint against India at the World Trade Organization (WTO) regarding the Production-Linked Incentive (PLI) scheme.
• The complaint alleges that India's PLI scheme provides subsidies for advanced chemistry cell (ACC) batteries, the auto sector, and Electric Vehicle (EV) production.
• China claims these subsidies are contingent on Domestic Value Addition (DVA), discriminating against Chinese goods.
• The WTO's Subsidies and Countervailing Measures (SCM) agreement regulates industrial subsidies to prevent unfair competition.

Detailed Insights:

• India's PLI scheme, launched in 2020, aims to boost Indian manufacturing by providing financial incentives based on incremental sales to strategic industries.
• The challenged PLI schemes include incentives for giga-scale ACC battery manufacturing, Advanced Automotive Technology (AAT) production, and attracting global EV manufacturers.
• China argues that DVA requirements in these schemes incentivize the use of domestic goods over imported goods, violating WTO law.
• WTO law prohibits Import Substitution (IS) subsidies, which are financial contributions contingent on using domestic goods over imported ones.
• An IS subsidy can breach the national treatment obligation under GATT Article III.4 and Article 2.1 of the Trade Related Investment Measures (TRIMs) Agreement.
• The WTO dispute resolution process begins with consultations between India and China; if unresolved, it proceeds to adjudication by a WTO panel.
• The WTO's Appellate Body is currently incapacitated, potentially delaying the final resolution if the panel's decision is appealed.

Key Concepts Involved:

• Production-Linked Incentive (PLI) Scheme: A scheme providing financial incentives to boost domestic manufacturing and attract investment.
• Domestic Value Addition (DVA): The percentage of a product's value that is added domestically through manufacturing and other processes.
• Import Substitution (IS) Subsidy: A subsidy contingent upon the use of domestic goods over imported goods.