Table of Contents
INDIA AT WTO
•Commerce Secretary Rita Teaotia today said there was a “real” possibility that India
could lose the trade dispute that the US had filed in the WTO on export subsidies.
(Export subsidy is given by the govt through Exim Bank. It is not levied on exporters, but given as an incentive to them.)
US COMPLAINTS AGAINST INDIA
• Basics –
•An export subsidy is an incentive given to exporters(domestic industry)so that they remain
competitive in the global trade.
•The WTO had categorised export subsidies into RED (prohibited), YELLOW(permitted but actionable) and GREEN(permitted and non actionable).
• However, under WTOs Agreement on Subsidies and Countervailing Measures(ASCM) developing countries are given exemptions to this rule as exports play a key role in
their development.
1. The developing country should have GNI per capita income below USD 1,000. According to CEIC Data,
India’s GNP per capita was $1,978 in 2017
2. Product criteria i.e export subsidy can’t be given to a product if the exporting country accounts for more than
3.25% of the total world trade for that product for two consecutive years.
WHAT IS THE U.S ARGUMENT
•All of Indian schemes which it has brought before DSB fall under red category
•India can’t be considered as a developing country to claim exemptions because India had already exceeded per capita income of USD 1,000 in 2015.
•These schemes are unfairly benefiting Indian manufacturers at the cost of USAs workers.
THE COMPLAINTS ARE ABOUT FIVE SPECIFIC SCHEMES:
•export-oriented units scheme and sector-specific schemes, including the electronics hardware
technology parks scheme
•the merchandise exports from India scheme
•the export promotion capital goods scheme
•special economic zones
•the duty-free imports for exporters programme
NOTES
The US said that thousands of Indian companies are receiving benefits totalling
over USD 7 billion annually under various export promotion programmes.
INDIA’S PREPARATIONS FOR AN ADVERSE
VERDICT
1. India is not strategically prepared for the consequences— specifically in terms of alternative mechanisms to boost exports without subsidies
2. The special economic zone (SEZ) policy, for example, is clearly not WTO compliant, but there is no alternative scheme yet
3. India wants to achieve “a quantum jump in exports” through procedural stuff like digitization of ports or fewer tariff notifications
4. There is a need for a massive structural overhaul that can wean exporters off certain subsidies without affecting export performance
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