United States has flayed half a dozen Indian export subsidy schemes
and said they harmed the American Industry by creating an uneven level playing
field in global trade. The schemes the US Trade representative said besides
providing financial benefits to Indian exporters, allowed them to sell their
products at cheaper rates to the detriment of US Industry. If India is not
amenable to reason during the bilateral talks, US would press the World Trade Organization
to set up a dispute settlement mechanism to resolve the issue according to
USTR in a statement released last week identified them as Merchandise Exports
from India Scheme; Export Oriented Units Scheme and sector specific schemes,
including Electronics Hardware United Technology
Parks Scheme, Special Economic Zones, Export Promotion Capital Goods Scheme and
Duty Free Imports for Exporters Program.
"These export subsidy program harmed American workers by creating an
uneven playing field on which they must compete, the statement said.
USTR will hold the country’s trading
partners accountable by vigorously enforcing US rights under our trade
agreements and by promoting fair and reciprocal trade through all available
The statement assumes political significance as it is timed during the visit of
the New Indian foreign secretary Vijay Gokhale. Mr Gokhale who assumed office
last month is on a maiden visit to Washington and his program includes meeting with the USTR.
US President Donald Trump had publicly taken exception to India’s decision to
levy customs duty on import of US motorcycles.
India the statement said has given
exemption from certain duties, taxes, and fees which benefits numerous Indian
exporters, including producers of steel products, pharmaceuticals, chemicals,
information technology products, textiles, and apparel.
Thousands of Indian companies are receiving benefits totaling to over $7
billion annually from these programs, USTR has alleged. The export subsidies
provide an unfair competitive advantage to recipients.
A limited exception to this rule is for specified developing countries that may
continue to provide export subsidies temporarily until they reach a defined
economic benchmark. India was initially within this group, but it surpassed the
benchmark in 2015. India's exemption has expired, but India has not withdrawn
its export subsidies.
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India introduced the Merchandise Exports from
India Scheme in 2015, which has rapidly expanded to include more than 8,000
eligible products, nearly double the number of products covered at its
from Special Economic Zones increased over 6,000 per cent from 2000 to 2017,
and in 2016, exports from Special Economic Zones accounted for over $82 billion
in exports, or 30 per cent of India's export volume.
from the Export Oriented Units Scheme and sector specific schemes, including
Electronics Hardware Technology Parks Scheme, increased by over 160 per cent
from 2000 to 2016, it asserted.
that consultations are the first step in the WTO dispute settlement process,
The USTR said if the US and India are not able to reach a mutually agreed
solution through consultations, it may request the establishment of a WTO
dispute settlement panel to review the matter.