India to Appeal Against WTO Panel Ruling on Export Incentives

The panel called on India to withdraw the export-contingent subsidies with periods varying 90 to 180 days.

Updated
India
2 min read
The panel called on India to withdraw the subsidies within periods varying 90 to 180 days.
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India will appeal against the ruling of WTO's dispute settlement panel, which held that domestic export incentive schemes are inconsistent with global trade norms, an official said, according to PTI.

The ruling on Thursday, 31 October, stated that India should not provide subsidies based on export performance.

“India will be appealing the decision of the panel regarding the four schemes to the Appellate Body of the WTO,” the official said.

‘Inconsistent With Global Norms’

The dispute panel on Thursday ruled that India's export incentive schemes such as Merchandise Export from India Scheme (MEIS), Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTP)Scheme; SEZ (special economic zone); and Export Promotion Capital Goods (EPCG) Scheme were inconsistent with global trade norms.

The ruling on Thursday, 31 October, stated that India should not provide subsidies based on export performance.

The panel has stated that India will not get an eight-year period like other developing countries for phasing out these schemes, and has called on India to withdraw the export-contingent subsidies within periods varying 90 to 180 days, Reuters reported.

However, it has stated that duty free import for exports (DFIE) scheme does not violate WTO law.

The panel also held that the scrips provided through the MEIS are contingent on export performance, and therefore not allowed under the WTO norms, PTI reported.

The panel has ruled that barring DFIE, all schemes provide subsidies linked to export performance and it is inconsistent with global trade norms.

The panel has stated that India will not get an eight-year period like other developing countries for phasing out these schemes.

With this ruling, India has to re-work these schemes and make them compatible with global trade rules, being framed by 164-member Geneva-based World Trade Organisation (WTO).

According to trade experts, the ruling would impact India's exports and the government will have to immediately work on alternatives.

"We need to immediately work on new schemes, which are WTO compatible," Rafeeq Ahmed, the Chairman of Farida Group, said, according to PTI.

US Welcomes Ruling

US Trade Representative Robert Lighthizer on Thursday welcomed the ruling of WTO's dispute settlement panel.

Reacting to the ruling, Lighthizer said under the leadership of President Donald Trump, the US is using every available tool, including the WTO enforcement actions, to ensure American workers are able to compete on a level playing field, according to PTI.

Lighthizer said that the panel has agreed that India provides prohibited subsidies to Indian exporters worth more than $7 billion annually, including subsidies to producers of steel products, pharmaceuticals, chemicals, IT products and textile.

"This is a resounding victory for the United States," he said in a statement.

(With inputs from PTI and Reuters)

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