(Image source from: www.ndtv.com)
With the constant trade disputes between India and America, there seems to be yet another lingering dispute that India is suffering from. India suffered from a hectic setback from the World Trade Organisation (WTO) in a filed dispute against the United States. According to the raised complaint, it has challenged the export subsidy schemes including one for the special economic zones.
The WTO ruled against India stating that these specific export subsidy programmes violated the provisions of the trade body norms. Counteracting those thoughts, New Delhi is expected to appeal the ruling in front of the organisation’s important Appellate Body.
A highly experience dispute panel in the WTO suggested that these export subsidies opted by the Indian government violated some of the provisions under the trade body’s norms.
Addressing the caution, the panel during the ruling stated saying, “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 & Countervailing Measures (SCM).”
Some of the other schemes that have also been affected by this ruling include the following:
• Merchandise Exports from India Scheme (MEIS)
• Export Oriented Units Scheme
• Electronics Hardware Technology Parks Scheme and Bio-Technology Parks Scheme
• Export Promotion Capital Goods Scheme
• Duty-Free Imports for Exporters Scheme
In a statement issued by the office of the US Trade Representative, it exclaimed saying, “According to the Indian Government, thousands of Indian companies are receiving subsidies totaling over $7 billion annually from these programs, and India has increased the size and scope of these programmes.”
It also emphasised saying that India gives prohibited subsidies to the producers of steel products, pharmaceuticals , IT products, chemicals and even textiles and apparels.
Even last year, US did challenge the Indian trade subsidies and export programmes and WTO claiming that the same is harming the American workers citing the possible agreement did phase out some of the eventual subsidies that they are indulging in.
As per the agreement, it provides the graduating countries with a period of eight years and if they pass out the $1,000 mark at the 1990 exchange rate, the same will result in the eventual phasing out of the export subsidies.
The WTO panel decided that India has already graduated from the exemption that it had before and wasn’t necessarily eligible for further transition period.
In further down the report, WTO panel also said that India was granting the export subsidies in the form of exemptions from the needed custom duties along with the service tax involved. The other factors included deductions from the taxable income and some issuance of the notes and scrips that the firms can easily use to pay off the government.
The panel has already recommended the withdrawal of the export contingent subsidies within a matter of 3-6 months, but India is going to appeal further to the Appellate Body. The nation has got just a month to appeal to the Appellate Body which is the highest court around the world for trade disputes.
-Somapika Dutta