India Likely To Lose Trade Dispute With U.S., Says Commerce Secretary

Commerce Secretary Rita Teaotia today said that there was a possibility of India losing the trade dispute that the U.S. had filed in the World Trade Organisation on export subsidies.

“There is a real possibility that India will lose the trade dispute with the U.S. at WTO over subsidising exports,” Teaotia said at an ICC interaction today. That’s because income levels in India had crossed the threshold for exports to be subsidised, she added.

India has been responding “very strongly” to the U.S.’ allegations, according to the secretary. And while direct subsidy to exports cannot be given, the government can legitimately support regulatory compliances required in other countries, Teaotia said. “Benefits to services exports will remain untouched, and GST refunds to exporters will continue as well,” she added.

Support for input subsidy is also legitimate, the commerce secretary said. “However, incentive only for exports is not eligible. There must be a cost incurred and then compensation.”

The government has already set up an expert group to look at WTO-compliant support to exports, and a draft set of schemes will be announced for discussion, Teaotia said.

The existing export subsidy schemes are continuing, as the dispute is yet to be resolved. The U.S., in March this year, had dragged India to the WTO’s dispute settlement mechanism over export subsidies, saying that these incentives were harming American companies.

Washington had challenged India’s export subsidy programmes such as Merchandise Exports from India Scheme in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field. The U.S. had said that thousands of Indian companies are receiving benefits totalling over $7 billion annually under various export promotion programmes.