India All Set To Lose Major Trade Dispute Over Export Subsidy Programs To The United States At The WTO

India is all set to lose a major trade dispute with the US at the World Trade Organization (WTO) after a WTO panel upheld a US complaint that export provisions provided by the Indian government violated the trade body’s subsidies and countervailing measures pact.

The WTO ruling will be released to all member countries by October 10.

Earlier, a WTO panel struck down Indian export promotion schemes on the ground that India is not entitled to provide such subsidies because its per capita gross national product (GNP) has crossed USD 1,000 per annum.

India will have a month to challenge the ruling before an appellate body, which is the highest court for global trade disputes. If the appellate body upholds the panel’s ruling, India will have to discontinue its existing export promotion schemes.

If the appellate body upholds the panel’s finding, programs like export-oriented units scheme, electronics hardware technology parks scheme, bio-technology parks scheme, merchandise exports from India scheme, export promotion capital goods scheme, special economic zones and duty-free imports for exporters would have to be discontinued.

The ruling has come at an opportune time for the United States has been piling pressure on the Indian government to open the Indian market for medical products, particularly heart stents and knee implants, dairy items and other products, as part of an interim trade deal.

Also, the WTO’s appellate body is set to become dysfunctional from December 11 because of a US decision to block the selection process to fill six vacancies in the appellate body. Therefore, it remains to be seen how India will challenge the WTO panel’s ruling.

Incidentally, though the US has scored a significant victory against India, it has not implemented the appellate body’s ruling in favor of India against the US’s countervailing measures for carbon steel products so far.