US and China Push Back on India's "Make in India" Manufacturing Incentives

India's Manufacturing Ambitions Face Global Trade Backlash

India's production-linked incentive scheme, introduced in 2020, has drawn fire from the world's largest economies, including the US and China, for breaching global trade norms. The scheme, aimed at boosting domestic manufacturing, carries a total outlay of 1.91 trillion rupees ($21 billion) across 14 sectors.

US imposes preliminary duties of 126% on solar imports from India, citing unfair subsidies. The hefty levies are expected to effectively shut Indian solar panel makers out of the US market. The action comes as the World Trade Organization's (WTO) dispute settlement body agreed to establish a panel to examine China's complaint that India's incentive programs unfairly favor domestic goods over imports.

India's Ministry of Commerce and Industry has not responded to a request for comment, but officials in New Delhi say the country will strongly defend its incentive programs, arguing they fully comply with WTO rules. The programs are central to India's goal of raising manufacturing's share of gross domestic product to around 25%. Currently, manufacturing makes up about 17% of GDP.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

China has also accused India of unfair subsidies, citing the country's incentive programs in automotive and renewable energy technologies. The dispute highlights the complexities of global trade and the need for India to explore alternative ways to support industries, such as investing more in technology and innovation.