WTO backs US, declares India’s export subsidies illegal  

WTO panel report
File Photo

New Delhi (NVI): In a major setback to India, the World Trade Organisation (WTO) on October 31 termed the country’s domestic export subsidy programmes as “illegal”.

The WTO’s dispute settlement panel concluded that India’s schemes including the provision for special economic zones (SEZ) have violated free trade rules of global trade norms, according to WTO Panel report.

It further ruled that India is not entitled to provide subsidies depending on export performance as its per capita gross national product crossed $1,000 per annum, and according to Article 3.1 of the WTO’s SCM agreement, all developing countries with gross per capita of $1,000 per annum for three consecutive years are required to stop all export incentives.

Last year on March 14, the case was filed by United States against India to the WTO’s settlement panel which argues over National Capital’s domestic subsidy schemes for steel, medicine, chemicals, information technology and textiles amount to $7 billion a year.

The WTO’s settlement panel backed United States and urged India to withdraw the concerned export subsidy schemes within a time period of 90 days from the adoption of the report and SEZ schemes within 180 days.

It has also asked India to withdraw the prohibited subsidies under the Merchandise Exports from India Scheme (MEIS), Export Promotion Capital Goods (EPCG), export-oriented units (EOU)/Electronics Hardware Technology Parks (EHTP and Bio-Technology Parks (BTP) schemes within a period of 120 days

However, with regards to export subsidy schemes, India has the right to challenge the ruling before the WTO dispute settlement mechanism. New Delhi has a month to appeal against the WTO’s order.

–PS