US drags India to WTO on export subsidy

New Delhi, March 15: India on Thursday said it will engage with the US to explain its position on export schemes following UD’s decision to drag India into the WTO against programmes to incentivise shipments, a top official said on Thursday

US on late Wednesday evening challenged India’s export subsidy programmes such as Merchandise Exports from India Scheme in the World Trade Organisation ( WTO), saying these initiatives harm the US firms by creating an uneven playing field.

They have sought consultations with India under the aegis of the global trade body’s dispute settlement mechanism.

“The US has asked for a consultation process, we will engage fully in the process and we would make sure that we make our position known to the US. We expect that they would also engage with a positive spirit with an effort to resolve a dispute with a friendly country,” commerce secretary Rita Teaotia told reporters here.

Developed countries have raised issues at different forums that as India has crossed the $ 1,000 threshold of the per capita gross national income ( GNI) for three consecutive year, it is no longer eligible to give export subsidies.

The secretary said that a clause of WTO’s Agreement on Subsidies and Countervailing Measures provides a period of eight years for graduating countries ( crossing the $ 1,000 mark) to phase out export subsidies.

\“Our presumption is that India also hasa similar period of eight years to graduate out of the subsidy regime and this is what we would be placing before the US. We are hopeful that they would recognise this time- frame and during this time frame, we would commit ourselves and meet our obligations,” she said.

There is a confusion over the year from which the eight year period will be calculated. India wants that the reference year should be 2017.

She added that India has not violated any WTO norms and it would soon respond to the USA’s application. A WTO member country gets 60 days to respond.

According to the US, Indian subsidy programmes harm American workers by creating an “uneven” playing field.

The US’ decision to challenge the export subsidy schemes at WTO is an area of grave concern for domestic traders and the government should phase out these incentives, FIEO said on Thursday.

“It is a huge concern for export sector and the industry feels that the so called export subsidies should be eliminated gradually,” Federation of Indian Export Organisations ( FIEO) director general Ajay Sahai told PTI.

He said the US is a major market for domestic exporters as it accounts for about 14 per cent of India’s total exports.