Commerce Secretary Rita Teaotia on July 19 said there was a “real” possibility that India could lose the trade dispute that the U.S. had filed in the WTO [World Trade Organization) on export subsidies. This, she said, was because income levels in India had crossed the threshold for exports to be subsidised.
“There is a real possibility that India will lose the trade dispute with the U.S. at WTO over subsidising exports,” she said at an ICC (Indian Chamber of Commerce) interaction in Kolkata. However, India had been responding “very strongly” to the U.S. allegations, she noted.
While direct subsidy to exports could not be given, the government could legitimately support regulatory compliances required in other countries. “Benefits to services exports will remain untouched, and GST [Goods and Services Tax]refunds to exporters will continue as well,” she said.
Support for input subsidy was also legitimate. “However, incentive only for exports is not eligible. There must be a cost incurred and then compensation.” The government had set up an expert group to look at WTO-compliant support to exports, and a draft set of schemes would be announced for discussion.
Ms. Teaotia said that the existing export subsidy schemes were continuing, as the dispute was yet to be resolved.
In March 2018, the U.S. dragged India into the WTO’s dispute settlement mechanism over export subsidies, saying that these incentives were harming American companies. Washington challenged India’s export subsidy programmes such as Merchandise Exports from India Scheme in the WTO, asserting that these initiatives harmed its companies by creating an uneven playing field.
The U.S. said that thousands of Indian companies were receiving benefits totalling over $7 billion annually under various export promotion programmes.