China Requests WTO Dispute Consultations Over Indian Production Incentives
China requested dispute consultations at the World Trade Organization last week with India, regarding the latter's incentives in the automotive and renewable energy sectors, the WTO announced.
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Specifically, China is contesting three measures: a production-linked incentive for the creation of "giga-scale manufacturing facilities" for advanced chemistry cell battery storage; a production incentive for the automobile and auto component industry; and a scheme to boost manufacturing of electric passenger cars in India. All three programs are part of the "Make in India" initiative, which is meant to attract investment and expand the country's manufacturing sector.
China alleged that the measures appear to violate the Agreement on Subsidies and Countervailing Measures (SCM) and the Agreement on Trade-Related Investment Measures (TRIMS). They go against the SCM Agreement because "they constitute subsidies" that are "contingent upon the use of domestic over imported goods." They also violate the TRIMS Agreement because "they constitute trade-related investment measures that are inconsistent with the national treatment obligation," China's request said.
In addition, the dispute alleged that the measures violate Article III of the General Agreement on Tariffs and Trade 1994, since they "accord less favorable treatment to imported goods than to like domestic goods" through their domestic value addition requirements.