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    India loses export incentive case filed by US at WTO, to appeal against the ruling

    Synopsis

    A WTO panel ruled that Indian export subsidies are prohibited and should be removed.

    US wins WTO Challenge to India export Subsidies
    NEW DELHI: India suffered a setback at the World Trade Organization (WTO) in a dispute against the US that had challenged its key export subsidy schemes including the one for special economic zones. The WTO has ruled that these export subsidy programmes violated provisions of the trade body’s norms. New Delhi is likely to appeal the ruling before the organisation’s Appellate Body, officials said.

    A dispute panel in the WTO ruled that these export subsidy programmes provided by the Indian government violated provisions of the trade body’s norms.

    “The dispute panel rejected India's claim that it was exempted from the prohibition on export subsidies under the special and differential treatment provisions of the WTO's Agreement on Subsidies & Countervailing Measures (SCM),” the panel said in its ruling.

    The other affected schemes are - Merchandise Exports from India Scheme (MEIS), Export Oriented Units Scheme and sector specific schemes, including Electronics Hardware Technology Parks Scheme and Bio-Technology Parks Scheme; Export Promotion Capital Goods Scheme; and Duty-Free Imports for Exporters Scheme.

    “According to the Indian Government, thousands of Indian companies are receiving subsidies totaling over $7 billion annually from these programs, and India has increased the size and scope of these programmes,” office of US Trade Representative said in a statement.

    It said India gives prohibited subsidies to producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel.

    Last year, the US challenged India’s export programmes at the WTO claiming them to harm American workers citing the agreement that envisages the eventual phasing out of export subsidies.

    The agreement provides a period of eight years for graduating countries (least developed and developing) which cross the $1,000-mark at 1990 exchange rate to phase out export subsidies.

    However, such countries need to stop all export incentives if per capita GNI of such a country crosses $1,000 for three consecutive years.

    The panel determined that India had "graduated" from the exemption it was originally entitled to and was not eligible for any further transition period.

    In its ruling, the global trade watchdog said that India was granting prohibited export subsidies in the form of exemptions from customs duties and the integrated Goods and Services Tax, deductions from taxable income, and the issuance of notes or scrips that firms can use to pay off certain debts to the government.

    However, other US claims regarding a subset of exemptions from customs duties and an exemption from excise duties were rejected by the panel.

    While the panel has recommended withdrawal of the export-contingent subsidies within 90-180 days, dated from the formal adoption of the ruling, India is likely to appeal the ruling in the Appellate Body, officials said.

    India has a month to challenge the ruling before an appellate body, the highest court for global trade disputes.

    New Delhi has already set the ball rolling to replace the MEIS and has proposed the Remission of Duties or Taxes on Export Product (RoDTEP) scheme which would come into force from January 1, 2020.
    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

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    23 Comments on this Story

    Mir Masarath Ali279 days ago
    We do not know how GNI was calculated and what inputs were taken into consideration.
    All are all indians earning 1000$ a month ie approximately Rs 65000/ barring 20 to 30℅ of the population of 120 crores.
    Rest are leading a hand to mouth existence.
    George285 days ago
    Governments after Governments in India from a long time embraced freebees scheme instead getting into infrastructure developments to creat a better atmosphere or edge over to our Industries to be global competitive and even we said good bye to innovations, science and encouraged superstitions in our country and now we are facing embarrassed globally on our products and to sustain we again support them with subsidies , freebees , concessions which are against international trade norms.
    Concessions, subsidies to be provided only in health, education and for the creation of infrastructure facilities, which will help in long term basis for the people , with US now winning this case against our exports will have serious effect on our exports and quite possible to dwindle further.
    Srinivasan V285 days ago
    WTO , UN , IMF, WB are controlled by White Man . You can never win a case against them even if you are correct. Best Ex. is IRAN. Pakistan has Nuclear arms, Saudi has why IRAN should not have . Because oil is not given in Petro Dollars they want to kill IRAN . Hence this is as per expected lines
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