A World Trade Organisation committee on Thursday ruled that Indian export subsidies were illegal and asked it to remove them, upholding a complaint lodged by the United States, Reuters reported.
The dispute panel largely agreed with American claims challenging the subsidies granted as exemptions from customs duties and a national tax but rejected some of the US contentions. The world trade body called on India to withdraw the export-contingent subsidies within periods varying from 90 days to 180 days.
In a statement, the US Trade Representative’s Office said the world body had noted that India provides prohibited annual subsidies of more than $7 billion (Rs 49,663 crore) to Indian exporters, including producers of steel products, pharmaceuticals, chemicals, Information Technology products and textiles.
“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 and Countervailing Measures,” the committee said in its ruling, according to The Economic Times.
The other affected schemes are Merchandise Exports from India Scheme, Export Oriented Units Scheme, and sector specific programmes such Electronics Hardware Technology Parks Scheme and Bio-Technology Parks Scheme, Export Promotion Capital Goods Scheme, and Duty-Free Imports for Exporters Scheme.
The US had lodged its complaint with the world trade body last year, claiming India’s export programmes were harming American workers. It cited the agreement that envisages the eventual phasing out of export subsidies.
According to the pact, graduating countries (least developed and developing nations) that cross the $1,000 per-capita Gross National Income mark – at 1990 exchange rates – for three consecutive years get eight years to stop all export incentives. The dispute panel determined that India had “graduated” from the exemption it was originally entitled to and was not eligible for any more transition period.
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