India may lose U.S. trade spat in WTO over export support

Income levels in India had crossed the threshold for export subsidies: Teaotia

Commerce Secretary Rita Teaotia on Thursday said there was a “real” possibility that India could lose the trade dispute that the U.S. had filed in the WTO on export subsidies.

This, she said, was because income levels in India had crossed the threshold for exports to be subsidised.

‘Very strong response’

“There is a real possibility that India will lose the trade dispute with the U.S. at WTO over subsidising exports,” she said at an ICC interaction here. However, India has been responding “very strongly” to the U.S. allegations, Ms. Teaotia said.

She said while direct subsidy to exports cannot be given, the government can legitimately support regulatory compliances required in other countries.

“Benefits to services’ exports will remain untouched, and GST refunds to the exporters will continue as well,” she said.

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, she said.

The U.S., in March this year, dragged India to the WTO’s dispute settlement mechanism over export subsidies, saying that these incentives were harming American companies.